In this review, we highlight three recent Ontario cases from 2022 and 2023:

• Ramcharan v Wesdome Gold Mines Ltd, [2023] OJ No 3900, 2023 ONSC 4643
• Nicholas v Dr. Edyta Witulska Dentistry Professional Corp., 2022 O.J. No. 2297
• Rahman v Cannon Design Architecture Inc, [2022] OJ No 2603, 2022 ONCA 451

We highlight specific termination provisions that the Ontario Courts have deemed to be unenforceable.

CASE STUDY #1

Ramcharan v Wesdome Gold Mines Ltd, [2023] OJ No 3900, 2023 ONSC 4643

At para 29:

The termination provision reads as follows:

Termination

This Agreement and your employment with the Company may be terminated at any time for just cause, without prior notice or any payment in lieu of notice or payment of any kind whatsoever, either by way of anticipated earnings or damages of any kind, by advising you in writing.

The Company may at any time terminate this Agreement and your employment, in accordance with the Employment Standards Act, (Ontario) (the "ESA"). The provisions of this paragraph will not apply in circumstances where you resign from employment or are terminated for cause. [Emphasis added.]

Reasoning of the court: The termination provision in this case stipulates that the company may terminate the employment agreement and the employee's employment at any time for just cause without prior notice or any payment in lieu of notice or payment of any kind whatsoever, by advising the employee in writing. This provision also states that the company may terminate the employment in accordance with the ESA, but this does not apply where the employee resigns or is terminated for cause.

The court found this termination provision unenforceable because it failed to comply with the minimum requirements of the ESA, particularly because it disentitled the plaintiff to any payment if terminated for just cause, which contradicts the ESA's provisions that ensure protection for terminated employees, including those terminated for just cause.

CASE STUDY #2

Nicholas v Dr. Edyta Witulska Dentistry Professional Corp., 2022 O.J. No. 2297

Termination provision cited below quoted from the case:

(c) Material terms of the Employment Agreement

8 The draft written employment agreement included the following provisions which are material to the issues in the proceeding:

(ii) "6. Termination
(a) Termination with Cause

Your employment may be terminated immediately by the Employer without notice or pay in lieu of notice should cause for termination exist under the common law of the courts of Ontario.

(b) Termination without Cause

The Employer may terminate your employment at its sole discretion, for any reason whatsoever
that does not amount to cause, upon giving you the appropriate advance notice in writing, or paying you the equivalent termination pay in lieu of notice based on the greater of the following or pursuant to the Employment Standards Act, 2000, S.O. 2000 c. 41 (or its successor), which
payment is inclusive of all entitlements under statute, common law, contract or otherwise:
[a table of various lengths of service and listed periods of notice was set out. The period of notice for a length of service of eight years or more was stated to be eight weeks]"

The above-noted entitlement is set out in the Employment Standards Act, 2000.

The court held that the termination provision is not enforceable. This is because the termination without cause provision of the agreement was void as it was not in compliance with the Employment Standards Act (ESA), specifically because it excluded the continuation of payment of benefit contributions during the notice period. The provision for termination with cause under common law was also found to be void because it did not meet the ESA's higher standard for termination for cause.

The non-competition and non-solicitation provisions were deemed unenforceable; the former lacked evidence of exceptional circumstances to justify its necessity, and the latter was too broad and lacked reasonable limitation.

Rule that came out of this case:

The termination without cause provision of the employment agreement is void and unenforceable, as it does not comply with the Employment Standards Act and common law requirements for termination for cause.

CASE STUDY #3:

Rahman v Cannon Design Architecture Inc, [2022] OJ No 2603, 2022 ONCA 451

Rule: The court held that termination clauses in employment contracts must comply with the ESA, and that employers cannot contract out of the ESA's minimum standards. Termination provisions that allow for termination without notice or payment in lieu of just cause are invalid if they contravene the ESA. Furthermore, the court recognized the concept of common employers within interconnected corporate entities, holding that multiple related corporations can be considered as a single employer if they exercise sufficient control over the employee.

Between Farah Rahman, Plaintiff (Appellant), and Cannon Design Architecture Inc., Cannon Design Ltd. and The Cannon Corporation, Defendants (Respondents)

Citation of the termination provision:

Para 14: There are two "just cause" provisions in the Employment Contracts, one in the Offer Letter and the other in the Officer Agreement.

The Offer Letter provision states that no notice will be given if there is just cause to terminate. It
reads as follows:

CannonDesign maintains the right to terminate your employment at any time and without notice or payment in lieu thereof, if you engage in conduct that constitutes just cause for summary dismissal.

Para 15: The just cause provision in the Officer Agreement states that "if the Employee is terminated for cause,
Paragraph 3(a) applies". Paragraph 3(a) provides that Ms. Rahman would receive one month's notice.

Para 25: The Operative Just Cause Provision states that no notice or payment will be given if there is just cause to terminate. For ease of reference, I set out that clause again:
CannonDesign maintains the right to terminate your employment at any time and without notice or payment in lieu thereof, if you engage in conduct that constitutes just cause for summary dismissal.

According to the ESA, notice and termination pay must be given for all terminations, even those for just cause, except for "prescribed employees" who are guilty of willful misconduct or neglect of duty that is not trivial and has not been condoned by the employer. Therefore, since the provision allowed termination without notice or payment for just cause alone, it was found to contravene the ESA and was rendered void. The court ruled that all the termination provisions in the contract were invalid due to the violation of the ESA by the just cause provision, following the precedent set in cases like Waksdale v. Swegon North America Inc. Therefore, they could not be relied upon to govern the termination of Ms. Rahman's employment.

The termination clause in the case of Rahman v Cannon Design Architecture Inc. included a provision allowing termination without notice or payment in lieu if there was just cause for summary dismissal. However, the court found this provision unenforceable because it contradicted the Employment Standards Act, which requires notice and termination pay for all terminations except for those involving prescribed employees guilty of willful misconduct. As a result, the court ruled that the termination provisions in the employment contracts were void and could not govern the termination of Ms. Rahman's employment. The decision hinged on the interpretation of the law and the contract's language, as well as the factual determination that the respondent companies were her common employers, thus jointly liable for damages due to wrongful dismissal. The appeal was allowed, and the case was sent back to the Superior Court to determine the remaining matters, including the quantification of damages for failing to provide reasonable notice.