September 19, 2022

Employment Standards Act

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Employees typically expect their employment to continue unabated, absent “just cause” for termination by the employer. If termination should occur, an employee should expect to receive proper notice of the termination. Proper notice is notice to the employee, which is lawfully compliant.

Proper notice, then, may be stipulated within the employment contract, as long as it complies with the minimum standards set out in the Employment Standards Act, 2000.

Proper notice, alternatively, absent specific contractual terms, will be determined as reasonable, within the relevant circumstances, based upon “Bardal Factors”.

Bardal Factors stem from the decision Bardal v. Globe & Mail Ltd. (1960), 24 D.L.R. (2d) 140 (Ont. H.C.). These factors include the character of the employment itself, the length of service of the employee, the age of the employee, and the availability of other, similar employment, for example. These factors contribute to the determination or calculation of what pay-in-lieu of proper notice per the common law is and is owed to the terminated employee by the employer.

Wrongful dismissal is often the essence of a dispute and occurs when an employee is terminated without either proper notice or without proper pay-in-lieu of notice. Employers would be wise to ensure that employment contracts have termination clauses which are not inconsistent with the ESA and preclude the need for litigation and consideration of Bardal Factors. Reality is, however, that many employment contracts are not ESA compliant or have termination clauses which are not enforceable. When an employment contract termination terms are unenforceable, the employee stands to realize an award per common law worth many times more than would be the case if the minimal standards of the ESA applied. Therefore, it is often wise for a recently terminated employee to seek the opinion of legal counsel before accepted a termination or severance package or hastily signing any employment ending waivers. by seeking legal counsel, the employee is less likely to leave money in the table that they can put their own pockets.

The conundrum of making a wrongful termination right recently gained a new wrinkle due to the decision Waksdale v Swegon North America Inc. 2020 ONCA 39. The employee, Benjamin Waksdale, was offered pay-in-lieu of notice equal to 2 weeks pay as he had worked in a senior sales position with the company only 8 months at the time of termination. Waksdale sued for six (6) months equivalent pay in the alternative and the matter was settled out of court for five (5) months equivalent pay — almost 11 times more than the company was prepared to pay!

In the Waksdale decision, Waksdale was terminated without cause. The termination clause citing termination “without cause” in Waksdale’s employment contract was consistent with the ESA but the equivalent clause citing termination “with cause” in the same contract breached the ESA. Swegon, the employer, argued that because the relevant part of the contract was ESA compliant, the employer ought to be allowed to rely on that part of the contract. The Ontario Court of Appeal disagreed. The court determined that, in the interests of clarity and justice for all, an employment contract must be read as a whole and would not allow the employer to sever parts or provisions within a contract to meet a specific case favourable to the employer.

The Ontario Court of Appeal determined that “an employment agreement must be interpreted as a whole and not on a piecemeal basis. The correct analytical approach is to determine whether the termination provisions in an employment agreement read as a whole violate the ESA. (Furthermore) the courts… will not enforce termination provisions that are in whole or in part illegal.” Accordingly, the court struck down the entire contractual termination scheme due to part of the scheme not complying with the ESA. There are, currently, countless employment contracts written prior to the Waksdale decision being rendered. Employees, for this reason, are especially prudent to obtain legal counsel to review their employment contract if terminated since a non ESA complaint contract could mean termination or severance pay ten (10) times more – or more – than is being offered by their employer.

And, of course, employers ought to have their contracts reviewed to give consideration to unexpected liability in the event they terminate employees.



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