It seems that the further we get into the global pandemic the more and more we lose the systems and structures that once helped to protect us. Employment law– one of the many safeguards that helped protect our jobs is also in the weeds, and is but one of many governing bodies that does not know how to respond and adapt to the rapid change that COVID-19 has enforced.
In case you missed it, a few months we launched a special report about employment law and how the unprecedented nature of COVID-19 might allow employers to escape consequences of temporary layoffs (something that is usually considered to be constructive dismissal).
(If you want to read the report click here.)
Not long after our launch, the Ontario government actually codified this decision. The Ontario Regulation 228/20 decisions explain that a reduction or elimination in hours would be deemed for Employment Standards Act (ESA) purposes as “infectious disease emergency leave”. This prevents the ministry of labour, whose job it is to apply the ESA from finding that a COVID-19 related reduction in work qualifies as constructive dismissal, even if it would have in normal times.
While this provides some necessary relief to employers going through a difficult time, it makes ordinary workers even more vulnerable and ripe for abuse. Even before this regulation was introduced, people had been approaching our office and describing situations where their employer had told them they’d be terminating or laying them off due to COVID-19, but the truth was that the employer had other, more nefarious reasons for letting them go.
Fortunately, section 8 of the ESA says that the legislation doesn’t affect any civil remedy an employee might have at common law. This basically means that even though the written legislation no longer helps someone who has experienced a constructive dismissal, a Court can still consider all the circumstances and make its own ruling based on past Court decisions (this is called “common law”).
This is just one more reason that it is important to scrutinize “termination clauses” in employment contracts, which often try to limit the remedies someone can claim to those available under the ESA. These termination provisions must be fully compliant with the minimum requirements of the ESA, or else they will be void and an employee will be entitled to the full amount of notice they would have at common law (which is usually much higher).
But what about if there is a termination clause that is compliant with the ESA if someone is terminated “for cause”, but non-compliant if they are terminated “without cause”?
In Waksdale v Swegon North America Inc., 2020 OCNA 391, the Ontario Court of Appeal answered this question in a manner that may render hundreds of thousands of termination clauses unenforceable.
In Waksdale, the Plaintiff, Benjamin Waksdale, was terminated without cause and claimed 6 months of severance. Under the ESA, he only would have received two weeks. The Plaintiff admitted that the “without cause” portion of the termination clause was valid. However, the “with cause” portion did not comply with the ESA and was therefore illegal.
The Court of Appeal found that even though Mr. Waksdale was not terminated according to the “without cause” portion of his termination clause, that “an employment contract must be interpreted as a whole and not on a piecemeal basis.” Recognizing the power imbalance between employees and employers as well as the fact that the ESA is designed to be remedial in its nature, the Court held that Mr. Waksdale’s termination clause was unenforceable as a whole just because one part of it was non-compliant with the ESA. Therefore he was entitled to his common-law notice.
The Takeaways from this Decision Are:
- That after months of taking a beating, employees finally have a “win” in the justice system. Termination clauses that seek to limit an employee’s severance to the minimum owed under the ESA have a detrimental effect on vulnerable workers, and therefore Ontario’s highest Court has rubber-stamped the fact that they must be drafted with the utmost care and fully comply with the legislation- even a small error may render them unenforceable.
- For the very reason outlined above, the takeaway from this case is that a good lawyer who is appraised of the relevant developments in employment law can be the difference in a terminated worker getting “taken to the cleaners” with a minimal severance package, and a terminated worker getting the severance they deserve. Always have a lawyer review your severance package. At our office, we pride ourselves on giving frank advice, which means telling people who are being treated fairly that they don’t need a lawyer and fighting vigorously for those who are being treated unfairly.
Contact Millars Law When You Can’t Afford to Lose
Contact us at (519) 657-1LAW or info@millarslaw when you can’t afford to lose.
By: Michael Hodgins