Earlier Cases Not Consistent with Modern Law

Mesgarlou v 3XS Enterprises Inc. is a September 2002 decision of Rutherford, J. of the Ontario Superior Court. The contract in question spoke to the right of termination without cause in these words:

After the first three (3) months of employment, both parties shall give notice in accordance with the Ontario Employment Standards Act prior to terminating this employment agreement.

This was found to be sufficient to rebut the inference of the common law, notwithstanding that there were no specific works clearly stating that the common law was to be of no moment.

The Ontario Superior Court again considered a similar issue in Lloyd v Oracle,  concluding in April 2004 that the following language was effective in contracting out of common law right of notice, again without any clear and direct reference to the ouster of the common law regime:

Oracle may terminate your employment at any time, without cause, upon giving prior written notice in accordance the Ontario Employment Standards Act, or any similar legislation which is in force in the province within which Oracle’s offer of employment is accepted.

Of some note may be the trial judge’s assessment of the plaintiff as a prudent experienced business person who had debated this clause with the company and had plainly elected to take his chances with the offer as presented.  This subjective assessment of the qualifications of the employee was later determined by the Ontario Court of Appeal to be of no consequence in Rahman v Cannon. Also there was no reference to the statutory payment. Further, it would be expected that the termination clause should specifically refer to a contracting out of common law notice which this clause did not address.

A similar approach by which the trial judge examined the business savvy of the plaintiff was apparent in Swinton J.’s decision of April 2002 in Ross v  Christian & Timbers in which she upheld an arbitration agreement importing Ohio law into the employment agreement in apparent violation of Ontario’s minimum standard. (see also Flynn v Shorcan in which the trial judge commented on the degree of sophistication of the parties and affirmed on the Court of Appeal, although not precisely on this issue) This is unlikely to be followed today.

The Ontario Court of Appeal in Roden v Toronto Humane Society, a decision released in September of 2005, agreed with the trial judge that there was just cause for dismissal. The court considered, in any event, the impact of the employment contract which read as follows:

Otherwise, the Employer may terminate the Employee’s employment at any other time, without cause, upon providing the Employee with the minimum amount of advance notice or payment in lieu thereof as required by the applicable employment standards legislation.

The argument advanced by the plaintiff, Roden, was that the agreement failed to address the issue of benefit continuation for the ESA notice period. The court concluded that the agreement did not attempt to contract out of the ESA benefit plan contributions and because the agreement was silent on this issue, the defendant was obliged to and did comply with the benefit continuation. Once again, the agreement did not speak with clarity to the denial of the common law remedy.

The Ontario Court of Appeal in Clarke v Insight Components, a case decided in December of 2008, agreed that the contractual term was effective in limiting the common claim. In this case, the operative clause read:

“Your employment may be terminated without cause for any reason upon the provision of reasonable notice equal to the requirements of the applicable employment or labour standards legislation. By signing below, you agree that upon receipt of your entitlements in accordance with this legislation, no further amounts will be due and payable to you whether under statute or common law”.

One argument raised on appeal was that this provision would also negate any claim under the Ontario Human Rights Code, given the broad reference to “under statute”. The Court stated that the question as to whether such a human rights claim was barred did not arise in this case as no specific assertion of a human rights violation had been made in this instance. This did reference the elimination of the common law remedy. It did not deal with severance pay. The words “for any reason” have recently been determined to be offside the ESA.