The drafting of a termination clause was once again the cause for a review and once again, the court ruled that the termination clause was ineffective in eliminating the common law requirement.[1]

The most recent case does involve the particular wording of the contract in issue, but at a higher level, it is reflective of the need for careful clear drafting to take away the right of the employee to fair notice.

The Decision

The contract under review contained a clause which seemingly attempted to limit the employee’s claim on termination to the minimum of the Employment Standards Act. The specific words were as follows:

Movati Athletic Inc. may terminate your employment without cause at any time during the term of your employment upon providing you with notice or pay in lieu of notice, and severance, if applicable, pursuant to the Employment Standards Act, 2000 and subject to the continuation of your group benefits coverage, if applicable, for the minimum period required by the Employment Standards Act, 2000, as amended from time to time.

One might expect that this clause would indeed be effective in limiting the termination claim. The motions judge hearing the case initially, however, found otherwise.[2]This decision was based on the view that particular direct language was required to oust the common law claim.

Presumably the language should have stated words to the effect that this payment was to be in full satisfaction of all common law claims of reasonable notice, or similar language such as “only” the ESA sums were to be paid.

This wording, the motions judge found to be confusing, hence ambiguous. This latter word is a death knell to every employer counsel as the law is clear that the ambiguity is to be read against the interests of the drafting party, usually the company.

The decision was affirmed on appeal. The appellate court examined other terms of the same contract to assist in interpreting the intent of the contract. For example, the probationary termination clause did specifically that “only” the minimum statutory sum need be paid, a word which was absent from the general termination clause.

To succeed on the appeal, the employer was required to show a clear and palpable error in law, which was simply not present in this instance.

Take Away to Employer

It is important to take firm and careful advice in the drafting of a termination clause. It is an art and a science combined. Prudent advice may lead to an effective defence. It is far from an impossible task.

Employees’ View

The words of the contract are usually quite difficult to read from an individual’s perspective. A preliminary review prior to signing and indeed on termination may well lead to a legal opinion of a remedy which is not apparent to a straightforward reading. In the precedent case, the plaintiff won an award of only $15,000 based on a three month award.[3] This was high stakes poker as a loss would have resulted in costs well in excess of this sum for her.

Get Advice and Know Your Rights

The issue of a termination provision is very important to all parties. Often the employer document may apply not only to the case being litigated but also to other present employees. The stakes may be significant.

The employee must approach the case with caution. The costs of a lost case could be enormous.

Take advice, learn your rights and then act. For advice on this issue from either side, contact the offices of Toronto employment lawyers Grosman Gale Fletcher Hopkins. We regularly advise workplace parties on a wide range of legal workplace issues. Contact us online or by phone at 416 364 9599 to schedule a consultation.

[1] Movati Athletic (Group) Inc. v. Bergeron, This is the decision of the Divisional Court, which was sitting as the appellate court from the trial judgment.

[2] Bergeron v Movati

[3] One month of the three month award had already been paid.