Law Times

Law Times • augusT 20, 2018 Page 7 www.lawtimesnews.com Impermissible subdivision of a termination clause BY NIKOLAY Y. CHSHERBININ E nforceability of a termination clause in a written employment contract continues to be a vexing legal issue. An employment case in point is the Court of Appeal for Ontario decision in Amberber v. IBM Canada Ltd., 2018 ONCA 571, which clarified that subdivision of a termination clause into constituent parts and their subsequent in- dividual interpretation is not permissible. It also re-affirmed an important canon of contractual interpretation that a termina- tion clause must be interpreted as an or- ganic whole, not piecemeal. In Amberber, prior to joining IBM, Noah Amberber worked for its customer, Team Detroit, for 15 years. In March 2015, IBM hired Amberber and recognized his start date of Sept. 25, 2000 with Team De- troit for most purposes, including sever- ance under the termination provision of the employment contract entered into be- tween the parties. On April 19, 2016, IBM informed Amberber that his employment would be terminated, without cause, effec- tive July 8, 2016. In addition to 3.5 months' working notice, IBM provided Amber- ber with termination pay equivalent to 4.48 months of salary, in full compliance with the formula set out in the termina- tion clause. Displeased with his severance package, Amberber launched a wrongful dismissal lawsuit, claiming an entitlement to pay in lieu of notice at common law of 16 months' compensation. As part of his claim, Amberber asserted that the termina- tion clause was unenforceable. In response, IBM brought a motion for summary judg- ment, contending that Amberber's claim for damages at common law was precluded by the unam- biguous wording of the termi- nation clause. There have been a myriad of cases that have considered whether termina- tion clauses unambiguously exclude claims for common law damages. In Amberber, the ONCA aptly noted: ". . . not all of the cases can be easily reconciled." While the intention to ex- clude common law damages must be clear, the ONCA re- peatedly stated that "no particular form of words is required to achieve that result." Hence, litigants often search for the least fa- vourable interpretation of the termination clause with a view to invalidate it on the ground of ambiguity. However, ambiguity means something more than the mere ex- istence of competing interpretations. The question whether the ambiguity exists is to be determined by an objective evaluation of whether there are two or more reasonable interpretations, otherwise parol evidence would be admitted in virtually every case. In Amberber, the employment contract contained the following termination clause, which the motion judge subdivided into three parts and termed as the "options," "in- clusive payment" and "failsafe" provisions. The ruling stated that in the options provision, "If you are terminated by IBM other than for cause, IBM will provide you with notice or a separation payment in lieu of notice of termination equal to the greater of (a) one (1) month of your current annual base salary or (b) one week of your current annual base salary, for each completed six months worked from your IBM ser- vice reference date to a maxi- mum of twelve (12) months of your annual base salary." It also stated that in the inclu- sive payment provision, "this payment includes any and all termination notice pay, and severance payments you may be entitled to under provincial employment standards legis- lation and Common Law. Any separation payment will be subject to applicable statutory deductions. In addition, you will be entitled to benefit continuation for the minimum notice pe- riod under applicable provincial employ- ment standard legislation." Lastly, in the failsafe provision, it stated that "in the event that the applicable pro- vincial employment standard legislation provides you with superior entitlements upon termination of employment ('statu- tory entitlements') than provided for in this offer of employment, IBM shall pro- vide you with your statutory entitlements in substitution for your rights under this offer of employment." The motion judge concluded that the termination clause was ambiguous and, thus, unenforceable. She did so by constru- ing the "inclusive payment" provision as ap- plying only to the first part of the clause (the "options" provision). Because the "inclusive payment" provision was not repeated after the concluding sentence of the "failsafe" provision, the motion judge held that it was not clear that the "inclusive payment" pro- vision was meant to apply to the "failsafe" provision, which renders the clause am- biguous. It is generally accepted that where a termination clause can reasonably be in- terpreted in more than one way, the inter- pretation that favours the employee should be preferred. However, Amberber reminds people that "the court should not strain to create an ambiguity where none exists." On appeal, the ONCA found that there was no ambiguity and that Amberber was entitled to nothing more. The ONCA opined that it was a fundamental legal er- ror for the motion judge to interpret the termination clause in a piecemeal fashion by subdividing it into three constituent parts and interpreting them individually. It ultimately found that the motion judge committed extricable errors of law by sig- nificantly deviating from the text of the termination clause and straining to find an ambiguity where none existed. It is now beyond contestation that the interpretation of a written contractual provision must always be grounded in the text, which, in turn, must be read as a whole and in the context of the circum- stances as they existed when the contract was created. Failure to read a disputed provision as a whole is a question of law that is extricable from a finding of mixed fact and law and is reviewable on a cor- rectness standard. LT uNikolay Chsherbinin is an employment and immigration lawyer and author of The Law of Inducement in Canadian Employ- ment Law. He can be reached at 416-907- 2587 or by visiting nclaw.ca. Kali Larsen, articling student, contributed to this column. The gig economy and the law BY VANISHA SUKDEO W ho is a worker in Ontario? The test in the province to deter- mine who is an employee or an in- dependent contractor under the Em- ployment Standards Act includes certain fundamental criteria. To be considered an employee, you have to be provided with the tools and materials to work, you can- not subcontract to someone else, the business has the right to discipline you including dismissal and deter- mines matters such as how much you will be paid and deadlines for completion of work. At least some of the criteria have to be met in order to be considered an em- ployee. But the changing nature of work, due in large part to the rise of the gig economy, has created a need to revamp the test. Therefore, there are the questions that arise from this for companies and employees operating in Ontario and the lawyers that advise them. Questions you may encounter could include asking who an em- ployee is and who an independent contractor is, in light of the changing nature of work. Others may ask how Ontario legislation be drafted to help protect gig work- ers and if there is space for extralegal tools. In some jurisdictions, the terms "labour" and "em- ployment" are used interchangeably. In Ontario, la- bour is used to denote the unionized workplace while employment is the non-unionized workplace. There is space in both labour and employment law for gig work- ers. Either the base level can be raised through employ- ment law or gig workers can start to organize using la- bour law tools. Take Uber, for example. Platforms such as Uber allow for people to use an app on their phone to connect with people who are Uber "drivers" but not Uber employees. This is distinct from the model of taxicabs. Some taxi drivers work exclusively for a com- pany and get the information about where to pick up passengers through a centralized dispatch or pick up passengers who hail them curbside. In July, there was a decision by the Unemployment In- surance Appeal Board of New York State that found Uber to be operating as an employer; but this movement to rec- ognize more obligations f lowing from Uber to its "driv- ers" is slow. Uber was founded in 2009 and only in recent years is there movement to catch up with regulating these platforms. Also, the ability to allow Uber to operate legally is an issue at the municipal level in Canada as cities hold the authority about regulating taxi services and similar services, so Uber operates in legal limbo in many cities. The gig economy is also termed the "sharing economy," which sounds more polite to customers but also seems inaccurate. Is your Uber driver sharing with you or sim- ply acting as a taxicab? The underlying premise of the gig economy is that workers drive Uber on a part-time basis as a "side hustle" to a regular job. This can no longer be held to be true in all cases. Some workers get all or most of their income from the gig economy. The notion that workers are relaxing all day pursuing personal interests and only driving Uber for disposable income is untrue. As is often the case, the law has to play catch-up to new inventions. The creation of the gig economy has resulted in a gap or delay in legislation that addresses the concerns raised by gig workers. If companies in this new era are able to provide less coverage for people who make money through their service yet are not an em- ployer, what does this mean for the government? What is the government's role in supplying health-care bene- fits or ensuring that workers have stable working hours if they are just working on their "side hustle"? The system in the United Kingdom has been to adopt a f lexible approach. Jeremias Prassl, associ- ate professor of law at the University of Oxford Fac- ulty of Law, focuses on the role of the employer in his first book, The Concept of the Employer. This shifts the discussion from who is a worker to who is an em- ployer. Charlotte Garden, associate professor at the Seattle University School of Law, writes about the Seattle Solution in regards to Uber drivers uniting to form an organization akin to a union to increase their rights. The Seattle Solution is the name given to the ordinance drafted by the Seattle City Council that allows for a collective bargaining system among independent contractors who are typically left out of the collective bargaining model. What model works for Ontario? In my opinion, creating stronger legisla- tion that is well enforced can create more protection for gig workers so that they are able to make a living wage. Also, there is a role for unions to play in this area. Unifor has created community chapters that allow for gig workers to organize even if they do not work for the same employer. This allows for gig workers to organize in a way that is different from the typical bar- gaining unit structure that forms the basis of standard collective bargaining in labour law. Outside of the law, there are extralegal tools that can be used to protect precarious workers. Uber and other such platforms can create a code of conduct that guarantees that those who drive for the company make a certain minimum amount, similar to hard law pro- visions but acting outside of those boundaries. The potential to allow workers to have their voice heard in soft-law mechanisms that govern their workplace is to allow workers greater control over their workplaces. There should also be an enforcement mechanism for the code of conduct to ensure compliance. There are more tools than ever available to govern- ments and corporations to increase the rights of work- ers. It is simply a question of whether they care enough to use these tools and which tools to choose. LT uVanisha H. Sukdeo is a lawyer, course instructor and PhD candidate at Osgoode Hall Law School. Sukdeo is the author of Regulation and Inequality at Work: Isola- tion and Inequality Beyond the Regulation of Work. She can be reached at VanishaSukdeo@osgoode.yorku. ca and on Twitter @VanishaSukdeo. u SPEAKER'S CORNER COMMENT Labour Pains Nikolay Y. Chsherbinin

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