Ontario Superior Court applies Waksdale Decision to Invalidate Termination Provision
In Sewell v. Provincial Fruit Co. Limited, 2020 ONSC 4406, the plaintiff brought a motion for summary judgment to determine the notice payable because of his termination.
The plaintiff had signed an employment contract which included the following termination clause:
- b) Termination by the Company for Just Cause
The Company is entitled to terminate your employment at any time and without any notice or any further compensation for just cause and the Company will not have any further obligations to you whether at contract, under statute, at common law or otherwise.
- c) Termination by the Company without Just Cause
(A) The Company will be entitled to terminate your employment at any time without just cause by providing you with the following:
. . .
(ii) a payment, or at the Company's sole option, notice or combination of notice and pay in lieu of such notice representing termination pay and, if applicable, severance pay, as may be required under the Employment Standards Act, 2000, as amended from time to time (the "Separation Period");
The motions judge found that the employment contract violated the minimum standards set out in the Employment Standards Act, 2000 (the “ESA”) and was therefore unenforceable. In doing so, Justice Mandhane applied the Court of Appeal’s decision in Waksdale v. Swegon North America Inc. The Court found that the “for cause” termination provision violated the ESA by contracting out of the requirement to provide notice except in cases where the employee engaged in willful misconduct.
This is a relevant decision given that in Waksdale, counsel had conceded that the “for cause” termination provision violated the ESA.
The Court also found that the termination clause combined notice and severance pay entitlements in violation of the ESA, noting that the clause in question was “substantially similar” to the one found unenforceable by the Ontario Court of Appeal in Wood v. Fred Deeley Imports Ltd.
For my part, I find the Court’s findings with respect to the combination of notice and severance pay entitlements confusing. In Wood, the clause read:
[The Company] is entitled to terminate your employment at any time without cause by providing you with 2 weeks' notice of termination or pay in lieu thereof for each completed or partial year of employment... The payments and notice provided for in this paragraph are inclusive of your entitlements to notice, pay in lieu of notice and severance pay.
On its face, the clause in Wood expressly combined notice and severance pay within the two 2 weeks’ notice. The clause in Sewelll appears to separate reasonable notice (or pay in lieu therefore) from severance pay, which is only payable “if applicable” and “as may be required under the ESA” (i.e. in a lump sum).
One thing is certain: Confusion continues to abound when it comes to the enforceability of termination provisions. Unfortunately, this uncertainty creates challenges for both employers and employees.
Duty to accommodate – Where do employers draw the line?
Employers should do what they can to accommodate their employee’s disability, but there’s a line to be drawn between accommodation and frustration of the employment contract. If the contract is in fact “frustrated”, the employer can end the employment relationship without violating the Human Rights Code (Code). The question is whether the employer suffers undue hardship.
Section 11 of the Code allows the employer to show that a requirement, qualification or factor that results in discrimination is nevertheless reasonable and bona fide (legitimate). However, to do this, the employer must show that the needs of the person cannot be accommodated without undue hardship.
The duty to accommodate has both procedural and substantive obligations. The procedural component requires that the employer take steps to understand the employee’s disability-related needs and undertake an individualized investigation of potential accommodation measures to address those needs. The employer bears the onus of demonstrating what considerations, assessments and steps were undertaken to accommodate the employee to the point of undue hardship. The purpose of the duty to accommodate in an employment context is to ensure that an employee with a disability could continue to perform the essential duties of his or her employment if his or her needs can be accommodated without causing undue hardship to the employer.
The test for undue hardship is not total unfitness for work in the foreseeable future. If the characteristics of a disability are such that the proper operation of the business is hampered excessively or if an employee with such a disability remains unable to work for the reasonably foreseeable future even though the employer has tried to accommodate him or her, the employer will have satisfied the test. The duty to accommodate is compatible with general labour law rules, including both the rule that employers must respect employees' fundamental rights and the rule that employees must do their work. The employer's duty to accommodate ends where the employee is no longer able to fulfill the basic obligations associated with the employment relationship for the foreseeable future.
In Nason v. Thunder Bay Orthopaedic Inc. the employee was terminated while on unpaid medical leave. The trial judge awarded damages for wrongful dismissal. The Court of Appeal ruled that the employer’s decision to put the employee on an unpaid leave of absence was not an infringement of his rights, at that time, since the employer had already attempted to accommodate the employee. The employee could not fulfill the basic obligations of his position, despite the accommodations he received. However, the Court rejected the employer’s argument that the employment contract had been frustrated.
The onus to prove that the contract was frustrated was on the employer. The employer believed that the employee’s limitations were permanent. However, the employer did not seek medical information to sufficiently explore and conclude whether there was no reasonable likelihood that the employee could be returned to work with accommodations in the future.
The employer must assure that the tasks required of the employee are actually necessary to meet the employer’s goals. If the employee could continue his/her employment while avoiding such tasks and while still achieving the employer’s requested goal, there is no undue hardship. The test was set out by the Supreme Court of Canada. To establish a bona fide occupational requirement, the employer must prove that the requirement:
- was adopted for a purpose or goal that is rationally connected to the function being performed (such as a job, being a tenant, or participating in the service);
- was adopted in good faith, in the belief that it is necessary for the fulfilment of the purpose or goal; and
- is reasonably necessary to accomplish its purpose or goal, in the sense that it is impossible to accommodate the claimant without undue hardship.
What does this mean for Employers?
Employers should err on the side of caution and seek counsel prior to claiming frustration of the employment agreement. If it’s done prematurely, the employer could be subject to a wrongful termination claim, giving rise to common law reasonable notice or a claim for discrimination pursuant to the Code. Employers should also run an individual investigation into the employee’s limitations. It’s one thing to say that the employee cannot meet the demands of the job regardless of available accommodations. The employer must prove it by way of a proper and full investigation into the employee’s limitations. Prior to claiming frustration of the contract, the employer should consider the following:
- whether it investigated alternative approaches that do not have a discriminatory effect;
- reasons why viable alternatives, if any, can’t be put in place;
- whether it can meet the legitimate objectives in a less discriminatory way;
- whether the job requirement is properly designed to make sure the desired qualification is met without placing an undue burden on the people it applies to; and
- whether other parties who are obliged to assist in the search for accommodation have fulfilled their roles.
British Columbia (Public Service Employee Relations Commission) v. BCGSEU,  3 S.C.R. 3.
Ellis v. General Motors of Canada Ltd., 2011 HRTO 1453.
Nason v Thunder Bay Orthopaedic Inc, 2015 ONSC 8097,  OJ No 6892.
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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.
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/.