Canadian Employment Law Today

Canadian HR Reporter, 2020 Canadian Employment Law Today Canadian Employment Law Today | | 7 More Cases More Cases by providing him with "payment, or at the company's sole option, notice or combina- tion of notice and pay in lieu of such notice representing termination pay and, if appli- cable, severance pay, as may be required un- der the Employment Standards Act, 2000, as amended from time to time." The contract also included a provision re- leasing the company from "any and all ob- ligations" under legislation or common law if it followed the termination clause. Sewell didn't seek legal advice before signing. A quick end On April 17, 2019, after six and one-half months with Provincial Fruit, the company terminated Sewell's employment without cause. It provided him with two weeks' salary and benefits as provided for under the Ontario Employment Standards Act, 2000. Sewell remained out of a job for just less than four months before he found new em - ployment in early August that paid about $34,000 less per year. Sewell sued for wrongful dismissal, claim- ing that the termination provision was unen- forceable because he hadn't understood the implications of it and the company hadn't explained it to him. He also argued that rea- sonable notice was implied in the employ- ment contract and he had been induced from his previous employment, making him entitled to eight months' reasonable notice, adding up to more than $100,000 in salary, benefits, unused vacation and the discretion - ary bonus. The court noted that, due to the power im- balance between employers and employees, it had to look at the employment contract as a whole with an eye toward protecting the em- ployee to determine if it satisfied the require- ments of employment standards legislation. That power differential, combined with the good-faith basis at the beginning of the em- ployment relationship, made it reasonable for Sewell to sign the contract without examining it extensively or seeking independent legal ad- vice, said the court. Contract unenforceable but no inducement The court found that the language of the em- ployment contract, when read plainly, com- bined both notice and severance pay entitle- ments. The Employment Standards Act, 2000 required both notice and severance pay for a without-cause termination, but the termi- nation clause stipulated that the company's payment upon termination would represent both termination and severance pay. As a re- sult, the clause violated the act, said the court. Since the language used in the "termination for just cause" provision violated employment standards legislation, the court determined that the contract as a whole was void and unen - forceable. This opened Sewell up to be eligible for common law reasonable notice. The court found that Provincial Fruit did not induce Sewell from his previous employ- ment, as Sewell had been considering chang- ing his employment before the head-hunter came calling. Although the company repre- sentatives expressed a hope that they would have a long employment relationship, they didn't promise anything and it was a "mutual- ly beneficial" arrangement when Sewell came aboard, said the court in eliminating induce- ment as a consideration toward the length of notice entitlement. Without any inducement consideration, the reasonable notice entitlement came down to the established factors — the character of the employment, the length of service, Sewell's age and the availability of similar em - ployment relating to his experience, training and qualifications. The court found that Sewell's demand for eight months' notice was too much. In addi- tion to him not being induced from his pre- vious employment, the evidence indicated that the employment contract was negotiated in good faith and Provincial Fruit genuinely felt there was potential for long-term employ- ment. Just because things didn't work out and the company decided Sewell wasn't right for the job after a short time didn't change the intention at the start, said the court. The court determined that four months was an appropriate notice period for Sewell's six-and-one-half-month stint with Provincial Fruit. It reduced the entitlement by two weeks because Sewell mitigated his damages by finding alternate employment shortly before the end of the reasonable notice period. The court denied Sewell's inclusion of the bonus in his entitlement claim. Since he was terminated without cause due to performance reasons, it was unlikely he would have re - ceived any bonus as it was entirely discretion- ary, said the court. Provincial Fruits was ordered to pay Sewell the equivalent of four months' salary and benefits minus the two weeks of mitigation, a total of $35,356.19, plus $20,000 to cover his legal costs. For more information, see: • Sewell v. Provincial Fruit Co. Limited, 2020 ONSC 4406 (Ont. S.C.J.). « from WRONGFUL on page 1 Termination clause combined notice and severance entitlements CREDIT: SIMONKR iSTOCK The worker signed the employment agreement without looking closely at it or seeking independent legal advice.

• Cover