Appeal denied in Ontario contract case

The Supreme Court suggests a more technical analysis of termination provisions is not the appropriate test, at least in Ontario.

Appeal denied in Ontario contract case

On June 29, 2016 CCP blogged about the Ontario Court of Appeal decision in Oudin v. Centre Francophone de Toronto where a termination provision was upheld despite the fact that it did not specifically set out each and every obligation the employer owed to the plaintiff under the Employment Standards Act, 2000 (the “ESA”).

The decision stood for the proposition that the intention of the parties should be paramount in interpreting termination provisions and there was no evidence that the parties intended the termination agreement to be interpreted in the manner advanced by the plaintiff after being dismissed.

The Court of Appeal’s decision was considered a victory for employers given some fairly onerous contract drafting obligations required in previous lower court decisions. Similarly, now that the Supreme Court of Canada has refused leave to appeal in Oudin, employers appear to have greater latitude in arguing that a more technical analysis of termination provisions is not the appropriate test, at least in Ontario.

CCP believes that the real lesson of this case, however, is that litigation is an expensive undertaking, even when an employer is ultimately successful. A more carefully drafted termination provision would have likely prevented litigation in the first place and is still the very best defence an employer has in minimizing liability. The following is list of non-exhaustive factors to consider when drafting and presenting employment agreements to employees:

  1. If the termination provision provides only for the minimum statutory entitlements, the contract should clearly communicate that the employee is not entitled to any additional payments.
  2. Employees must be provided with the employment agreement prior to starting employment in order to ensure there is proper legal consideration for the agreement. Employment agreements provided on the first day of employment or after employment has commenced are often found to be unenforceable by courts on the basis that the employer has not given anything to the employee in exchange for the employment agreement once employment commences.
  3. Related to this issue is the obligation to give the employee an opportunity to seek independent legal advice (“ILA”) prior to executing the agreement. An employment agreement provided to an employee on the first day of work for execution will likely not be enforceable because the employee has been deprived of his/her right to seek ILA. While employers are not required to ensure an employee gets legal advice, they must provide the employee with enough time to do so.
  4. Employers must refrain from making representations that the termination or probation provisions of the contract will not be enforced. In an attempt to secure a candidate, employers will often tell employees “not to worry” about the termination provisions. These representations will void those provisions if an employer then seeks to enforce the contract terms down the road after the work relationship has soured and the employee has been dismissed.
  5. The Employer must make sure that the employee has the ability to understand the terms of the employment agreement. If, for example, English is not the employee’s first language and it is clear that the ability to read and understand English is an issue, an employer should consider having the agreement translated into the employee’s first language.
  6. An employment agreement that does not comply with minimum statutory rights and obligations are not enforceable. For example, a contract that provides for two weeks’ notice for dismissal without cause will not be compliant with most provincial employment standards legislation once an employee has been employed for more than two years. An agreement that permits a dismissal for cause if an employee is absent for any reason for more than 7 days will not comply with provincial and federal human rights legislation and the employer’s obligation to accommodate disabilities or other protected grounds.

The lawyers at CCP are experienced in the drafting of enforceable employment agreements that comply with legislative obligations and court decisions. Click here for a list of lawyers that can assist with your employment contract questions.

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