The ravages of the Court of Appeal decision in Waksdale v. Swegon North America Inc. are being felt. As mentioned in our previous blogs, this decision is impacting almost every employment contract in the province. It is sending employers scrambling to update their employment contracts to address this new reality. Many employees who would only be entitled to severance pay under the Employment Standards Act, 2000 (“ESA”) before Waksdale are now able to successfully claim severance under the common law, which provides employees with far greater severance pay.
J.F. Lalonde of Vice & Hunter recently argued a case that invoked the Waksdale principles (Lamontagne v. J.L. Richards & Associates Limited, 2021 ONSC 2133). We represented the employee (a Chartered Accountant) who brought an Application for wrongful dismissal damages after being terminated from her employment. At the time of termination, the employee was 36 years old and had worked at the firm for a little over 6 years.
The Impact of Waksdale
Throughout the litigation, the Respondent employer sought to have the Waksdale decision excluded, knowing its grave impact on its chances for success. We argued and were wholly successful on a motion to prevent the Waksdale decision from being excluded from the Court’s consideration.
At the hearing of the application, we successfully argued that the “for cause” termination provision in the employment contract violated the ESA minimums, thereby entitling the employee to common law notice of termination, even if the employee had been terminated without cause. Waksdale confirmed that no matter where an illegal provision is located in the contract, if any provision fails to adhere to the ESA minimum requirements, the entire termination clause must fail and the employee is entitled to common law notice of termination.
We also convinced the Court that the termination clause failed due to the wording of the “without cause” termination provision. The “without cause” provision was silent on the issue of benefits and bonuses to be paid to the employee upon termination. We successfully argued that this silence, in conjunction with the rest of the provision, could be read as attempting to exclude payment of the benefits, bonuses, and severance, which contravenes the ESA. Ultimately, we proved that the termination clause contravened the ESA in numerous ways, thereby making the employee entitled to common law notice. Ultimately, the employee was awarded 10 months’ notice pay. The employer now also has to pay our clients legal costs (in addition to their own costs which are undoubtedly very expensive).
There have also been other recent decisions that explicitly deal with Waksdale. In the cases of Sewell v. Provincial Fruit Co. Limited, 2020 ONSC 4406 and Ojo v. Crystal Claire Cosmetics Inc., 2021 ONSC 1428, the Court found that both termination clauses, although different, violated the minimum requirements as prescribed by the ESA. There is no doubt that Waksdale is a crucial precedent that now invalidates many employment contracts in Ontario.
Vice & Hunter LLP Can Help
As an employer, it is crucial that you seek legal advice as soon as possible to ensure that the termination clause in your employment contracts is enforceable. As we have witnessed first-hand, an unenforceable termination clause can create an enormous unforeseen liability to an employer.
If you have recently been dismissed from your job, you may be entitled to far more compensation than you think, and very frequently, more than the employer offers as notice pay upon termination.
No matter what side of the dispute you are on, Vice & Hunter LLP is eager to provide you with sound legal advice. Our lawyers work with our clients to secure the best outcome at the earliest possible stage. Led by Partner J.F. Lalonde who has over 16 years of experience representing both employees and employers, our employment law team is well-versed in vigorously advocating for each and every client.