Canadian Employment Law Today

CELT May 15 2013.qxp:celt 467.qxd 13-05-02 9:49 AM Page 3 CANADIAN EMPLOYMENT LAW TODAY Finding the right words Wording of termination provisions in employment contracts can go a long way towards determining if they're enforceable former section compels employers to continue benefits during the period of WORDS are the voice of contracts. That notice, while the latter forbids them voice guides a court during interpreta- from contracting out of this employtion of a termination provision in an ment standard. employment contract. A lesson from a Relying on the wording in the termirecent case, Stevens v. Sifton Proper- nation provision, the employer argued ties Lid., suggests if the termination that while the provision did not refer to clause contains no explicit reference to benefits expressly, it addressed the continuation of benefits employee's entitlement to during the period of benefits implicitly, EMPLOYMENT statutory notice, it will because it stated: "you CONTRACTS be struck as unenforceagree to accept the…payable. Thereby, exposing ment in lieu of notice employers to the golden smelter of the and/or severance pay…in satisfaction reasonable notice doctrine, when cal- of all claims and demands…which may culating the dismissed employee's enti- arise out of status or common law with tlements. respect to termination of your employDeborah Stevens began employ- ment…." ment as an associate golf professional at the Riverband Golf Community in The employee has rights May 2007. In December 2007, she to benefits continuation assumed the position of head golf pro'out of statute' and the termination fessional, which was governed by an provision purported to take those employment letter. The letter set out away upon mere payment in lieu the termination provision as follows: of notice or severance pay. "The corporation may terminate your employment without cause at any time by providing you with notice or payment in lieu of notice, and/or severJustice I.F. Leach of the Ontario ance pay, in accordance with the Superior Court of Justice disagreed, Employment Standards Act of stating the employee has rights to benOntario." efits continuation arising "out of On Oct. 19, 2010, Stevens' employ- statute" and the termination provision, ment was terminated without cause, on its face, purported to take those effective immediately. At the time of away upon mere payment of the termination, the employer paid her a required payment in lieu of notice or sum representing three weeks' pay in severance pay. lieu of notice and continued her group For Justice Leach, the failing of the benefits for three weeks. termination provisions was that they Notwithstanding the employer's vol- attempted to "draw the circle" of untary provision of benefits, Stevens employee rights and entitlement on sued for wrongful dismissal. She suc- termination with a catch-all specificity cessfully argued the termination provi- that resulted in impermissible exclusion was null and void because it did sion and denial of the benefits continnot contemplate the provision of bene- uation rights mandated by the ESA. In fits during the notice period, contrary coming to this conclusion, Justice to ss. 61(1)(b) and 5(1) of the Employ- Leach relied heavily on Justice Wailan ments Standards Act, 2000 (ESA). The Low's analysis in Wright v. Young & | BY NIKOLAY CHSHERBININ | Rubicam Group of Cos., a case that bears close affinity on facts to Stevens. In Wright, Justice Low did not accept the defendant's position that the impugned termination provision did not exclude benefits during the statutory notice, even though it stated: "this payment will be inclusive of all notice, statutory, contractual and other entitlements." She observed that the termination provision did not contemplate the question of benefits, which are implicit to continue for the statutory notice period in accordance with paragraph 61(1)(b) of ESA. She went on to explain the termination clause provided for payment of base salary only. If such payment is to be treated as inclusive of all entitlements to compensation, it means there will be no compensation flowing to the employee with regards to the benefits, which are an integral part of compensation. Possibility of employment standards violation enough to void provision The Stevens and Wright decisions illustrate that the court will void the termination provision whenever there is a possibility that an employment contract provides an employee with less than to what she would be entitled under the applicable employment standards legislation. Their rationale finds support in Slepenkova v. Ivanov, which stands for the proposition that the termination provision will be void and unenforceable if it "potentially" violates employment standards. The Stevens and Wright decisions also reinforce an important point that if the interpretation of the words of the termination provision suggests an alternate reasonable meaning, the courts would interpret it as an ambiguity, discarding it favour of an employee, pursuant to application of the contra Published by Canadian HR Reporter, a Thomson Reuters business 2013 Continued on page 6 3

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