Canadian Employment Law Today

Canadian HR Reporter, 2020 separately or does the illegality of the "for cause" provision impact the enforceability of the "with notice" provision? The court's preference was to analyze the employment agreement as a whole and to refrain from enforcing termination provi- sions that are illegal in whole or in part, regardless of whether the illegal provision is relied upon. The enforceability of termi- nation provisions must be determined as at the time the agreement was executed. A sev- erability clause may not be utilized to sever the illegal portion, said the court, pointing out that the power imbalance in the em- ployment relationship and the remedial protections of the ESA should lead courts to focus on whether the employer has vio- lated the employee's statutory rights. In this case, the lower court erred because it failed to read the termination provisions as a whole and applied a piecemeal approach that didn't consider their combined effect, said the court. "The correct analytical approach is to de- termine whether the termination provisions in an employment agreement read as a whole violate the ESA," said the Court of Appeal. "Further, it is of no moment that [Swegon] ultimately did not rely on the ['for cause' pro- vision]. The court is obliged to determine the enforceability of the termination provisions as at the time the agreement was executed; non- reliance on the illegal provision is irrelevant." Bottom line for employers Of interest to employer advocacy groups, the employer in the Waksdale case may pursue leave to appeal to the Supreme Court of Cana- da. Absent a successful appeal, employers may face countless challenges to the enforceability of the termination provisions in employment contracts, a daunting reality for employers in a COVID-19 and post-COVID-19 world. The Ontario Court of Appeal's decision in Waksdale has added a new and significant twist to the enforceability of termination clauses in employment agreements. Employ- ers that wish to rely on an ESA-compliant "with notice" provision may be prevented from doing so and be required to pay the em- ployee common law reasonable notice if any other termination provision in the agreement violates the ESA. Accordingly, Waksdale puts employers on notice that they must take extreme care to ensure that every termination provision in their employment contracts com- plies with the minimum requirements of em- ployment standards legislation. To bolster the enforceability of termination clauses, employers should consider taking the following precautions if feasible: Draft termination "with notice" provisions utilizing language that states unequivocally that the parties intend to displace the employ- ee's common law reasonable notice rights. Explicitly reference all minimum entitle- ments under the statute. Ensure that any "for cause" termination provision in Ontario (and as applicable in other provinces) is drafted to account for the difference between "just cause" at common law and the ESA standard ("willful miscon- duct" or "willful neglect of duty"). State that if the termination clause falls be- low the requirements of the ESA now or in the future, it should be interpreted as complying with those requirements. Given this new reality, employers should review their employment contracts to ensure that all of their termination provisions comply with employment standards legislation. For more information, see: • Waksdale v. Swegon North America Inc., 2020 ONCA 391 (Ont. C.A.). • Wood v. Fred Deeley Imports Ltd., 2017 ONCA 158 (Ont. C.A.). September 9, 2020 | Canadian Employment Law Today CREDIT: JACQUESKLOPPERS ISTOCK The court's preference was to analyze the employment agreement as a whole and to refrain from enforcing termination provisions that are illegal in whole or in part. ABOUT THE AUTHORS George Vassos George Vassos is a partner with Littler LLP in Toronto, practising on a wide variety of labour and employment law issues. He can be reached at (647) 256-4504 or gvassos@littler.com. Rhonda B. Levy Rhonda B. Levy is knowledge management counsel for Littler LLP in Canada, monitoring legislative, regulatory and case law developments. She can be reached at (647) 256-4545 or rlevy@littler.com.

• Cover