Think you’re safe as long as you’re following the Employment Standards Act? What if your company’s behaviour and the contract don’t match? A recent Superior Court of Justice decision shows the importance of checking your contracts for discrepancies – even if you’re complying with ESA standards when terminating staff.
When John Wright was terminated from the role he’d held for five years he was offered 13 weeks leave, plus continuation of his benefits – in full compliance with the ESA. However, the court awarded him an addition nine months of notice – for 12 months total – because his contract would have violated the ESA if he had been fired after 15 years instead of five.
“At every point in time the employer actually did comply with the ESA. The court had a problem with enforcing the contract because it has the potential to violate the ESA,” Filion Wakely Thorup Angeletti associate Casey Dockendorff said. “Because the contract contemplated that they might not have [complied with the ESA], that termination provision is void and if that provision is void then you have nothing dictating the notice period and you fall back to the common law.”
A stepped progression for notice period meant that in earlier years the termination notice period was consistent with the ESA, however after a certain tenure the provisions stopped complying and became in violation with the ESA requirements. A second clause caused the court concern because it stated that the offer outlined was inclusive and “…no other severance, separation pay or other payments shall be made.” The court said this could be used to try and deny continued benefits to terminated employees.
Despite the fact that the employers’ behaviour complied with the legal requirements, the fact that the conract had the potential to violate the ESA made it void, the court said.
Dockendorff suggested employers take the finding as a reminder to check and refresh the termination provisions in their employment contract templates.
“Often employers use templates they’ve used for 15 or 20 years that don’t necessarily change with the law so it’s a good reminder to look at your contracts,” she said. “Go back and look at your termination language in your contract and make sure you’re not explicitly or implicitly excluding anything.”
A simple statement setting out the progression, and adding the phrase “or the minimum requirements as required by the Employment Standards Act, whichever is greater” could go a long way towards protecting employers, Dockendorff said.