Court of Appeal Strikes Down Termination Provision

Another One Bites the Dust...Court of Appeal Strikes Down Termination Provision

At this point, most employers know that termination provisions must be carefully drafted to ensure that they provide the minimum notice requirements for termination as set out in the Employment Standards Act, 2000 (the “ESA”). This applies to termination “without cause” provisions, as well as termination “for cause” provisions.

Under the ESA, the standard for terminating an employee for cause is “willful misconduct.” Conduct which permits the employer to terminate an employee “for cause” under the common law may not meet the statutory standard of willful misconduct. In such a case, the employer is required to pay the employee their minimum ESA entitlements. A termination provision which does not address this issue will be unenforceable.

In a recent decision, the Ontario Court of Appeal has found that where an employment agreement has a “for cause” termination provision which violates the ESA and a “without cause provision” which complies with the ESA, both provisions will be struck down as unenforceable. This is the case even if the employee is being terminated “without cause” and even in the face of a severability clause.

In Waksdale v. Swegon North America, the court examined an employment contract which had a termination “for cause” provision and a termination “without cause” provision in two separate paragraphs. The termination “without cause” provision complied with the ESA and was agreed to be enforceable. It was conceded that the termination “for cause” provision violated the ESA and was unenforceable Mr. Waksdale was terminated without cause but argued that because the “for cause” provision breached the terms of the ESA, this rendered both termination provisions unenforceable. The Court of Appeal agreed. The court found that the provisions must be read as a whole and that it is “irrelevant whether the termination provisions are found one place in the agreement or separated, or whether the provisions are by their terms otherwise linked.”

‍What does this mean for employers? Now is the time to review and update your employment agreements. Even if your termination provisions were drafted by an experienced lawyer, the wording used may be unenforceable. Many employment agreements currently in use have a “for cause” termination provision which does not comply with the ESA. This may now result in the termination “without cause” provision also being unenforceable.

‍What does it mean for employees? An employment agreement must be interpreted as a whole and not on a piecemeal basis. If you are terminated and are subject to the terms of an employment agreement, we strongly recommend that you have the entire agreement reviewed by legal counsel to confirm whether it complies with the ESA.

Frequently Asked Questions

Short-Term Disability Insurance: What should you do when a claim is denied?

I have been off work since May 2016 and have been trying to obtain short-term disability insurance since then. My doctor has provided me with three sick notes since then and at our last appointment she told me not to work. However, my application for short-term disability insurance has been denied. I’ve given the disability insurer the notes from my doctor and I’ve gone through the appeal process but have been denied again. My employer is now asking when I will return and I’ve booked an appointment with my doctor to see what she thinks. What should I do?

‍It is not uncommon for disability insurers to deny an initial application for short-term disability benefits. Often the reason cited for the denial is a lack of medical evidence of a disability. If the only documentation you have provided to the insurer are sick notes from your doctor it is usually of assistance to obtain further medical records from your doctor including something documenting your diagnosis. Often, after receiving such additional documentation an insurer will approve an application for disability benefits. If you continue to be denied benefits, it is likely time to consult with legal counsel. Also short-term disability benefits typically end within 6 months even if you are approved. Ensure you know when these benefits end and decide with your doctor whether you should be applying for long-term disability benefits if they are available to you.

With respect to returning to work you are entitled to rely on your doctor’s advice. If your doctor tells you not to work this should be documented in a doctor’s note and provided to your employer. Forcing you to return to work when your doctor says you’re sick is in breach of human rights legislation and it’s unlikely that your employer will insist on your return to work in the face of your doctor’s advice.

Are managers and supervisors ineligible for overtime pay?

I recently changed roles at work. My new title is “Accounts Manager” and I am responsible for all the company’s accounts payable and receivable. I also help other staff price our products and develop new accounts. I am very happy about my new role but my job used to be “9 to 5” and now I have to work late and on weekends. I asked my boss about overtime but was informed that managers and supervisors do not receive overtime pay. Is this true?

For most employees in Ontario overtime hours start after 44 hours of work in a week. For every hour worked in excess of 44 hours an employee is supposed to receive time and a half.

Under the Employment Standards Act there are exceptions to the general rule including that managers and supervisors do not receive any overtime compensation. For this “manager exception” to apply, an employee generally needs to be performing work that involves the supervision of other employees in a leadership role as opposed working in general administrative duties. Also, the exempt employee must be working in the manager role the majority of the time while at work - not just every now and then. The fact that someone’s job title includes the word “manager” or “supervisor” does not determine their entitlement to overtime pay. Rather, it depends on what the actual duties of the employee are.

Although many job titles, such Accounts Manager, include the word “manager” this does not necessarily mean you don’t get overtime pay. If your job does not involve supervising other employees this is a good indication that you may be entitled to overtime compensation. For more information you can seek legal counsel or examine the Ministry of Labour’s website at http://www.labour.gov.on.ca/.

Workplace Travel: Must I go if I'm worried about my safety?

My employer has again asked that I work in a foreign country. I am concerned that this posting is unsafe. Last time I worked abroad multiple bombings took place and several governments closed their embassies. I also had my personal belongings stolen while I was in what was supposed to be a secure area. Do I have to go work in this country? If I do is my employer required to provide travel insurance in case something goes wrong?

‍The first thing to look at is your employment contract. Most employment contracts contain both written terms, and unwritten terms that are implied into the contract by law. The written portion of an employment contract usually mentions the benefits and insurance coverage that an employer is required to provide and it may also mention work locations and travel.

Unless travel insurance is covered in the original contract, or has since been agreed to by the employer, an employer generally cannot be forced to provide travel insurance. Also, most travel insurance policies will not cover all of the risks you’ve outlined. However, the failure to mention travel or relocation in a contract may prevent an employer from requiring that an employee work in a foreign country. Whether an employer can make such a request, without it being specifically mentioned in the contract, depends primarily on the nature of the work and if foreign travel to that country was expected or foreseeable when the employee was hired or promoted into their current position.

If an employee has a legitimate fear for their safety they may be able to argue that a travel request from their employer is not consistent with their contract. The context of the employment and the country involved are important considerations. For example it could be implied into many contracts that travel to the United States is acceptable, whereas travel to parts of Afghanistan is not. It is always best to review your contract, check your facts, and consult with a Lawyer before making any demands of your employer.