Law Times

Law Times • February 5, 2018 Page 7 www.lawtimesnews.com Vexing termination clauses BY NIKOLAY Y. CHSHERBININ A question of enforceability of ter- mination clauses turns on the wording of the clause, the pur- pose and language of the Em- ployment Standards Act, 2000 and the ju- risprudence on interpreting employment agreements. With the release of Nemeth v. Hatch Ltd., 2018 ONCA 7, the Court of Appeal for Ontario threw that jurisprudence into confusion. Having found the termination clause to be unambiguous, the court concluded the silence of the termination clause con- cerning the employee's entitlement to severance pay and benefits did not denote the employer's intention to contract out of the ESA. In Nemeth, Joseph Nemeth's 19-year employment was governed by a written employment contract, which included the termination clause that stated "the Com- pany's policy with respect to termination is that employment may be terminated by either party with appropriate notice in writing. "The notice period shall amount to one week per year of service with a mini- mum of four weeks or the notice required by the applicable labour legislation." Following his without-cause dis- missal, Nemeth asserted the termination clause was ambiguous, contrary to s. 5(1) of the ESA and, thus, unenforceable, be- cause, in part, it was silent with respect to his entitlement to severance pay and ben- efits. Nemeth's lawsuit was adjudicated by way of a motion for summary judgment. The motion judge determined the ter- mination clause was not ambiguous and dismissed Nemeth's motion and his ac- tion. Nemeth appealed, arguing that the motion judge erred in fail- ing to find that he retained his rights to common law notice, because the termina- tion clause did not: contain express language excluding entitlements under the com- mon law; include any refer- ence to severance pay; and limit his entitlement to the ESA minimum. The latter was Nemeth's alternative argument, which the motion judge did not consider, but which ultimate- ly prevailed on appeal. The court concluded that it was clear from "the plain language of the termina- tion clause that the parties intended and agreed to limit" Nemeth's common law notice entitlements. It explained that the need for clarity does not mean the parties must use a spe- cific phrase or particular formula; rather, it suffices that the parties' intention to dis- place an employee's common law notice rights can be "readily gleaned" from the contractual language. The termination clause contemplated Nemeth to receive "one week per year of service with a minimum of four weeks or the notice required by the applicable la- bour legislation." This sentence contains two disjunctive conditions, with the latter being superf lu- ous. The latter condition will always re- main dormant, because the former will always either match or exceed Nemeth's ESA entitlement. This ambiguity makes it neither rea- sonable nor practical to leave the employ- ee in the position of having to keep an eye on the relationship between the statutory minimum and the contractual term. This is especially so since, in Wood v. Fred Deeley Im- ports Ltd., 2017 ONCA 158, the same court recognized that "many employees are likely unfamiliar with the employment standards in the ESA and the obligations the statute imposes on em- ployers." In Nemeth, the court agreed that the termination clause gave rise to two pos- sible interpretations. One interpretation was that it would limit Nemeth's notice en- titlement to the minimum prescribed by the ESA and the other interpretation was that it would not. By preferring the interpretation that gave Nemeth the greater benefit, the court concluded that the termination clause's language rebutted the presumption of reasonable notice and, as such, Nemeth was entitled to receive 19 weeks' contrac- tual notice. The termination clause's ambiguity is further compounded by its reference to the applicable "labour" legislation. In Wood, the court said "employees should know at the beginning of their employment what their entitlement will be at the end of their employment." From the plain-language perspective, how would one know which legislation the termination clause inferentially in- corporated? Is it the Labour Relations Act, the Em- ployers and Employees Act or, among many others, the ESA? Not only was the termination clause silent about the applicable legislation, it also contained no reference to Nemeth's entitlement to severance pay and benefits. Under the ESA, an employer's obliga- tion to give an employee notice and its ob- ligation to pay severance pay are separate obligations. At the time Nemeth signed his em- ployment contract, he did not know whether he would receive his statutory severance pay if his employment ended. Nor did Nemeth know whether or not he waived his statutory entitlements. Surprisingly, the court interpreted the silence of the termination clause as infer- entially incorporating Nemeth's statutory entitlements. It is a strained interpretation to attri- bute such meaning to the employment contract language that does not specifi- cally say so. This proposition finds direct support in Wood, where the same court made it clear by stating that "the wording of the clause alone must be looked at to decide whether it contravenes or complies with the ESA." Nemeth reaffirms the importance of carefully drafting termination clauses. It signals that the jurisprudence on the enforceability of termination clauses is undergoing yet another interpretative turn. Given the recognized power imbal- ance between employers and employees, courts should be reluctant to regard the silence of the contractual language con- cerning the employee's statutory entitle- ments as evidence of an employer's inten- tion not to contract out of the ESA. The employee's statutory entitlements at dis- missal should be explicitly stated in the contract. 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. Quiet sexism still persists in legal profession BY DARRYL SINGER T he #MeToo and #TimesUp movements have put the topic of sexual harassment, sexual assault and gender discrimination at the forefront of media and popular dis- cussion in a way I have never seen in my 50 years on Earth. Good. My cohort of law school classmates all know, and many have experienced such overt quid pro quo ha- rassment, in an attempt to get hired back after articling, climb the Bay Street ladder or land lucrative clients. More importantly, we need more systemic change in the legal profession. The answer, I believe, is for men to start taking a leading role in the public dialogue. Until men start doing more than just paying lip ser- vice with some weak "I support the victims" statements and change our attitudes wholesale, quiet sexism will continue. And I do not mean the sort of change brought about by fear. There are many serial harassers who will now suddenly be circumspect in their behaviour only be- cause of the risk of being fired or brought before the law society's discipline tribunal. As men, we need to change our very attitudes to- ward the women in our profession. And we need to ad- mit to ourselves that it will be difficult in many cases, human nature being what it is. Those of us who are employers, teachers and men- tors within the profession must lead by example; this is more than just words and pithy slogans on a lapel pin. But I am also concerned that while much emphasis is being placed on the serious acts of sexual harassment and sexual assault, we are overlooking the subtle — and in many ways more insidious attitudes of sexism — which may well continue to exist in the legal profession and which ultimately lead to the bigger problem. Not that long ago, in a crowded motions court, while I was awaiting my matter to be called, a senior lawyer stood up to introduce himself and began his argument on a motion. The judge asked if the woman at counsel's table was the client or his junior. He replied, with a dismissive hand gesture, "No, Your Honour, that's just my secretary." It was the gesturing and the emphasis on the word " just" that struck me. I'm betting that this counsel would never have been so dismissive of a male staff member, even if that male were a law clerk or a para- legal. I have a trusted associate lawyer who has been with my firm for six years. She runs many of the client files on her own and is, in fact, the main point of contact for almost all of the personal injury files in my office. Yet I cannot count the number of times in the last six years when clients, opposing male counsel and in- surance adjusters have referred to her as my "assistant." This, despite the fact they have been introduced to her as a lawyer and have her email or letters, which clearly indicate that she is a lawyer. I have had a number of male juniors over the years; not once has this sort of thing happened to them. Similarly, I have had over the last number of years a mix of male and female articling students. They go with me to meetings, discoveries and court. They are introduced as articling students. Their business cards and e-signatures clearly identify them. Yet, I routinely receive emails or calls from cli- ents (and opposing counsel) that refer to the female students as "assistants." Male articling students do not get called "assistants." Ever. I have had many clients, even recently, who refused to come in and meet with my female associates when I was unavailable. I have never had this issue when I was unavailable and asked the client to meet with a male staff member, even when that staff person was not a lawyer. Male lawyers and clients speaking about a particu- larly difficult opposing counsel will refer to a man as "difficult" or "aggressive" but always refer to the tough woman counsel as a "bitch." A young family lawyer that I mentor is routinely ad- dressed by senior male counsel opposing her as "sweet- heart" or "darling." These examples underscore a significant problem for young women entering the legal profession, partic- ularly for those who wish to start their own businesses. As male leaders of the profession, we owe it to our female colleagues to stand up for them and to educate them about the attitudes of otherwise nice men who may mean them no harm yet may be doing so without even realizing it. We must go further than simply paying lip service or signing a pledge. We must lead by example and po- litely and firmly correct behaviour tinged with quiet sexism. LT uDarryl Singer is a Toronto-area civil litigator. He can be reached at darrylsinger.com. u SPEAKER'S CORNER COMMENT Labour Pains Nikolay Y. Chsherbinin

• Cover