Law Times

Page 10 November 16, 2015 • Law Times www.lawtimesnews.com FOCUS For example, she says the re- cent Divisional Court case of Miller v. A.B.M. Canada Inc. re- inforced a growing body of case law that suggests the courts may set aside termination clauses that don't explicitly state that benefits will continue during the statuto- ry notice period under Ontario's Employment Standards Act. When that idea first emerged in the 2012 case of Stevens v. Sifton Properties Ltd., "it was groundbreaking," says Coulter. "For most companies in On- tario, they had to go back to the drawing board because it meant their termination clause tem- plates weren't . . . compliant. Yet there's not a week goes by that I don't come across an old termi- nation clause that has not been rectified," she adds. In Miller, the termination clause provided that the employ- er could terminate regular em- ployees at any time without cause "upon being given the minimum period of notice prescribed by applicable legislation, or by being paid salary in lieu of such notice or as may otherwise be required by applicable legislation." In their March 19 judgment, a panel of three Divisional Court judges ruled that the agreement's silence on the issue of benefits didn't lead to a presumption that they would be paid and that the termination section was at best ambiguous. As a result, they agreed with the trial judge's deci- sion to void the termination pro- visions and substitute common law notice. However, Coulter says em- ployers seeking to confine ter- mination provisions to the bare minimums mandated by the act may end up playing perpetual catch-up since her hunch is that a simple fix such as inserting addi- tional language about benefits is unlikely to stand up for long. "My own personal feeling about this is that courts will con- tinue to try to find creative ways to set aside termination provi- sions. Once everyone is compli- ant, courts will find another rea- son. At the end of the day, courts don't like employees just getting the statutory minimums. What a lot of companies are saying is that you will get all the statutory min- imums, plus some other amount, so that courts will be less inclined to find a fault." Despite the recent upheaval in the law around termination clauses, Rudner says they're worth the hassle to get them right even if it takes a review from an employment lawyer's critical eye. "They are invaluable for em- ployers because they provide certainty that the common law of reasonable notice simply does not," he says. "But you have to do it properly or it won't be worth the paper it's written on." Employees, too, can benefit in the long run, according to Rudner, by saving on legal fees in the event of a termination without cause. "The typical process is that an employer goes to a lawyer who will help them craft an offer that goes to the employee. They then go to their own lawyer to get an opinion, and if they don't match, suddenly you're involved in a negotiation and potential litiga- tion. You can avoid all that with a clear contract that lays out what will happen in the event of a dis- missal without cause." Rudner says another recent Divisional Court case, Luney v. Day & Ross Inc., offers a useful lesson to employers on how they can limit their exposure to statu- tory minimums in a clear and unambiguous way without try- ing to cover every single conceiv- able entitlement the employee may be due under the legislation in the termination clause. The plaintiff in Luney argued the termination clause in the contract with his employer, a fed- erally regulated company, violat- ed the Canada Labour Code be- cause it made no mention of ben- efits. However, the three-judge panel disagreed and upheld the provisions, noting that the word- ing of the clause provided that if the company's severance offer didn't conform with the code "or other similar legislation, the stat- utory minimums shall apply and be considered reasonable notice and severance." Rudner says a "saving clause" like that one accounts for chang- es in the law in the years after signing a contract and he notes he always advises his clients to include one. Laurie Jessome, a partner in the employment and labour law practice group at Cassels Brock & Blackwell LLP, says employers can also take solace from a recent Ontario Superior Court case in which the termination clause of a fixed-term contract served to limit the damages payable by a vehicle repair company to its for- mer employee despite a judge's ruling that the clause itself was ambiguous. In Howard v. Benson Group, a plaintiff terminated two years into his five-year contract want- ed the rest of the term paid out in full. He argued the termination clause, which provided that "any amounts paid to the employee shall be in accordance with the Employment Standards Act of Ontario," was void. Ontario Superior Court Justice Donald MacKenzie agreed the clause was ambiguous but accepted the defendant's argument that the inclusion of the clause showed the parties intended that it could be terminated early. As a result, the judge ordered a mini trial to determine the former employee's period of reasonable notice un- der the common law. "It's a fairly unique set of facts but it's still very important because normally an employer would be stuck paying out the remainder of the five years," says Jessome. 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Visit www.carswell.com or call 1-800-387-5164 for a 30-day, no risk evaluation Untitled-1 1 2015-11-11 1:54 PM Lawyer advises clients to include a 'saving clause' Continued from page 9 'At the end of the day, courts don't like employees just getting the statutory mini- mums,' says Catherine Coulter.

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