Chart: Cases Contracting out of Common Law
Narrative Review is above
| Issue | Authority | Decision |
|---|---|---|
| General Principles of Interpretation of Termination Clause | ||
| Wood v Fred Deeley Imports | Consider parties are not in equal bargaining power; | |
| OCA 2017 | Employees are unfamiliar with ESA; | |
| ESA is remedial legislation; interpretations which protect employee rights are favoured; | ||
| Clear wording is required to rebut presumption of fair notice obligation; | ||
| Court should prefer an interpretation which gives the greater benefit to the employee. | ||
| Waksdale v Swegon | Need for remedial interpretation of employee’s rights under ESA | |
| OCA June 2020 | ||
| Timing of case law | par 22 Dufault v Ignace not yet on Canlii | Appellate courts have demanded stricter standards to show compliance with ESA since Oudin in 2015 |
| Language used | Boule v Ericatel | Clear wording required to avoid common law claim |
| BCSC June 1998; | ||
| Hoadley v Manpower Services | ||
| NSSC April 2005; | ||
| Dodich v Leisure Care Canada | ||
| BCSC Jan 2006; | ||
| Cybulski v Addeco | ||
| NBKB July 2011 | ||
| Degree of sophistication of employee | Rahman v Cannon | This was determined to be an irrelevant factor, in addition to fact that plff took ILA. OCA setting aside motions decision on this issue and just cause question |
| OCA June 2022 | ||
| Impact of defective clause | Waksdale v Swegon | Once it is shown that one aspect of the termination clause is offside the ESA, the clause in its entirety will fail. In this case, the just cause violations led to the entire termination clause as unenforceable |
| OCA 2020; | ||
| Summers v Oz Optics | ||
| OSC Nov 2022 | ||
| Henderson v Slavkin | ||
| OSC Aug 2022; | ||
| Ramcharan v. Wesdome Gold Mines Ltd | ||
| OSC Aug 2023 | ||
| Voluntary compliance | Wood v Fred Deeley Imports | Subsequent compliance cannot cure the defect |
| OCA 2017; | ||
| Wright v Young and Rubicam | ||
| OSC 2011 | ||
| Ambiguity | Wright v Young and Rubicam | Read against the drafting party |
| OSC 2011 | ||
| ESA Interpretation Generally | ||
| SCC Re Rizzo Shoes | ESA is “benefits-concurring” legislation and should be interpreted in a broad and generous manner. Any doubt arising from language issues should be read in favour of the employee. | |
| Jan-98 | ||
| Benefits | ||
| Wood v Fred Deeley Imports | Benefits must be continued as status quo for the stat notice period, o/w clause is unenforceable. This cannot be cured by later compliance. | |
| OCA 2017 | ||
| Salary continued for notice period | Carpenter v Brains II | The use of the word “salary” does not incorporate benefits. Contract failed. |
| Div Ct May 2016 | ||
| Stevens v Sifton Properties | Benefits not referenced; agreement failed | |
| Potential Violation | ||
| Rossman v Canadian Solar | Clause was offside ESA as benefits were extended for only 4 weeks. On termination, entitlement was 3 weeks; potential violation after 5 years; clause unenforceable | |
| OCA 2019 | ||
| Shore v Ladner Downs | ||
| BC CA 1998 | ||
| Wright v Young and Rubicam | Clause offside as it did not contemplate severance pay after 5 years of employment | |
| OSC 2011 | ||
| Covenoho v. Pendylum | Agreement allowed for termination with no notice; after 3 months the contract would have been in violation of the ESA; clause unenforceable | |
| OCA 2017 | ||
| Potential seen as “too remote” at trial and not considered specifically on appeal as trial decision was reversed for other reasons. | Kerzner v American Iron & Metal Company | The facts, at trial, showed that the termination clause would be in violation of the Act once the combined notice and severance obligations exceeded 27 months, which would require that the plaintiff be employed until 2035, at which time the plaintiff would have been 78 years old. |
| OSC July 2017 | ||
| Given the employment relationship from 2008 to 2015, this was considered too remote to allow for the potential of being offside. | ||
| Kerzner v American Iron & Metal leave to appeal dismissed | ||
| OCA Dec 2018 | The foundation of this successful argument at trial was reversed on appeal as the Court of Appeal found that the agreement contracting out of the total employment history was in violation of the Act. For this reason, the “potential” reasons are trial were not needed to be reviewed on appeal. | |
| Leave to appeal dismissed | ||
| Unusual Potential Violation Submission | Amberber v. IBM | Agreement when signed would have produced a violation of ESA after 5 years. By the date of termination, this defect had been cured by the passing of time. This submission was not considered directly in the reasons. Contract was upheld due to saving provision, a result which would not have followed today. The case went to OCA but this specific argument was not before the OCA. |
| OCA June 2018 | ||
| Sole Discretion to Terminate | ||
| At Any Time | ||
| Dufault v Ignace not yet on Canlii | The agreement allowed the employer the right to terminate at any time in its sole discretion. This was found to be offside the ESA as it contradicted the protected rights of returning form a leave or the prohibition against reprisal. This issue was not specifically addressed as a potential violation in the decision, but this is the substance. There were other reasons to find the clause unenforceable, such as the failure to include vacation pay, leave pay allowed by contract and the absence of the differing just cause gradations. The case is unlikely to be appealed specifically on the “sole discretion to terminate at any time” words. | |
| Jan-24 | ||
| Henderson v Slavkin | Obiter on this issue. Decision upheld employer’s submission on right to terminate any time. Agreement failed due to just cause issue. | |
| OSC 2020 | ||
| Statutory Notice Period | ||
| Extension of the Notice Period | s. 62(1) ESA | Statutory period also extends employment term by the notice period. This may be important for severance pay and other issues re length of employment; |
| This makes 2 weeks a year offside, when there is severance eligibility, as at 5 years. | ||
| Service record at 5 years becomes 5 years plus 8 weeks, given 8 years of employment. | ||
| ss. 60(1) ESA | All monetary compensation must be included, such as contracted car allowance; | |
| “wages” includes monetary remuneration payable under contract; | ||
| Miller v A.B.M. | ||
| Div Ct March 2015 | ||
| Carpenter v Brains II | Contract which stated “base salary” for notice period failed as this did not reflect obligation to continue all forms of compensation; Termination clause must also allow for sick days and leave days. (Dufault) |
|
| OSC Jan 2024 Dufault | ||
| Vacation Pay | ||
| Dufault v Ignace | As in above case, failure to address vacation pay as included within statutory notice period was a violation of ESA | |
| OSC Jan 2024 | ||
| Vacation pay is mandatory on all bonus sums. There is an exemption for a bonus which is dependent on discretion of employer, and is not related to hours, production or efficiency | ||
| Kenpo Greenhouses v Director of Employment Standards | Vacation pay due on bonus sum set by private contract when higher than ESA minimum | |
| Geluch v Rosedale Golf and Country Club | “Use It or lose it” policy found to be offside ESA. 1 | |
| OSC June 2004 | ||
| Boyer v Callidus | Employer asserted vacation pay could not be carried forward. Such a term requires clear evidence which was lacking. | |
| OSC Jan 2024 | ||
| Length of Employment | ||
| subsection 65(2) ESA | Service history is cumulative and not consecutive for the purposes of severance pay. | |
| There is not an equivalent statutory definition for termination pay. | Unlike severance determination, termination pay is based on a service history which is consecutive only. | |
| Contracting out of employment history not allowed for ESA determination | Kerzner v. American Iron & Metal Company | An agreement by which the period of employment has been abbreviated cannot revise the calculation of the employment history. The immediate case involved the sale of a business, accompanied by a new employment contract given to the principal of the acquired company by which his prior employment was stated to be ignored for the determination of employment history. |
| OCA Dec 2018 | ||
| Severance Pay | ||
| Singer v Tullett Tokyo (not reported) | Service history must be Ontario based. | |
| Div Ct 1998; | ||
| Dao v Brick Warehouse | ||
| OLRB 2005; | ||
| Zhang v IBM | ||
| OSC Aug 2019; | ||
| Mittra v Royal Bank | ||
| OSC Jan 2024 | ||
| Hawkes v. Max Aicher | Payroll is not limited to Ontario. | |
| Div Ct 2011; | ||
| Podder v Maran Sanmugathasan | ||
| OLRB Feb 2024 | ||
| S. 65 (1) ESA | Severance pay is defined as “regular wages for a regular work week” | |
| Other ESA issues | The ESA also requires pay for statutory holidays, over-time for non-managers, equal pay for equal work, pregnancy leave, parental leave, statutory leaves, reprisal and reinstatement remedies. | |
| Just Cause – Differing Standards | ||
| Rahman v Cannon | Agreement failed to address the graded distinctions between ESA and common law. Contract unenforceable | |
| OCA June 2022; | ||
| Summers v Oz Optics | ||
| OSC Nov 2022; | ||
| Henderson v Slavkin | ||
| OSC Aug 2022; | ||
| Ramcharan v Wesdome Gold Mines | ||
| OSC Aug 2023 | ||
| Timing of the Payment | ||
| Dufault v Ignace | The ESA requires, presuming no working notice provided, that the sums due be paid in a lump sum and hence an agreement which states such will be paid over time is offside. | |
| OSC Jan 2024 | ||
| Fixed Term Contract | ||
| Regulation 288/01 | The ESA applies where: (1) employment ends before the fixed term has concluded; or | |
| (2) employment ends before the specific task has been completed: or | ||
| (3) the term exceeds 12 months; or | ||
| (4) the specific task is not completed within 12 months; or | ||
| (5) whatever the specific term may be (presuming 12 months or less as greater than 12 months requires ESA compliance) and employment continues for 3 months or more after this time period. | ||
| Kopyl v Losani Homes (not reported) | Plff hired under fixed term contract for a period of 12 months. Prior to the expiry of this fixed term contract, the plaintiff was terminated. There then arose the need for the statutory period of notice, given three months of employment. Plff recovered balance of contractual period. | |
| OSC 2023 | ||
| Mass Termination | ||
| O. Reg. 288/01, s. 3(1) | At least 8 weeks prior notice where number of terminated employees is 50 or more and less than 200; | |
| 12 weeks, greater than 200 and less than 500; | ||
| 16 weeks, greater than 500 | ||
| Saving Clause | ||
| Rossman v Canadian Solar | Policy issue in the interpretation of such clauses; saving clause ineffective | |
| OCA 2019 | ||
| Amberber v. IBM | Obiter dicta upholding saving clause | |
| OCA June 2018; | ||
| Henderson v Slavkin | ||
| OSC 2020 | ||
| Severability | ||
| Wood v Fred Deeley Imports | An offending clause is not severable | |
| OCA 2017; | ||
| North v Metaswitch Networks | ||
| OCA 2017 | ||
| Waksdale v Swegon | ||
| OCA June 2020 | ||
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