Canadian HR Reporter

www.hrreporter.com 25 'WIDE RANGE' OF UNCERTAINTY WITH TERMINATION PROVISIONS IN EMPLOYMENT CONTRACTS h a v e a l w a y s b e e n encouraged to engage in the use of employment contracts as a means to create certainty in the employment relationship at the moment of hire and to create certainty at the time the employment relationship ends — for whatever reason or by whatever means — to limit exposure to liability. However, the trend in recent cases has driven a wide ridge of uncertainty in the language of the termination provisions of employment contracts that employment lawyers consider safe and unambiguous in providing cer tainty of reduced liability at termination without cause. In the wake of such recent cases in 2020 — such as Waksdale v. Swegon North America Inc., Rutledge v. Canaan Construction Inc. and Sager v. TFI International in Ontario and Abrams v. RTO Asset Management in New Brunswick — we have been witnessing a trend to find termination provisions in employment contracts unenforceable, leaving employers with significant, unexpected damages in common law. In each of these cases, the minimum s t a n d a r d l e g i s l a t i o n u n d e r t h e Employment Standards Act (ESA) and in the Sager case under the Canada Labour Code — has gained unexpected prominence in distinguishing between "wilful misconduct" and "just cause." The thrust of recent decisions has d e t e r m i n e d t h a t t h e m i n i m u m s t a n d a r d l e g i s l a t i o n o f " w i l f u l misconduct" is a higher standard than the common law "just cause," given that "wilful" would involve an intention to engage in the unwarranted act. In so finding, employers have lost any comfort in the termination provisions of employment contracts by simply providing a greater benefit more than the minimum statutory entitlement but less than any potential common law reasonable notice or in providing a gratuitous payment to avoid engaging in "just cause" litigation. While not all employment contracts have to be radically changed, we would suggest some tweaking as follows: • If the contract language may be vulnerable to the "just cause" versus "wilful misconduct" distinction, clearly set out the list of grounds you are citing as defining "just cause" in common law. Whether or not your concerns as to what may constitute grounds for summary dismissal are those agreeable to the courts, this would have established transparency of concerns for the employer. Taking such an approach while engaging in progressive discipline would likely equate "just cause" in common law to the same level as "wilful misconduct" b eca u se, thro u gh tra n sp a ren c y and progressive discipline, the terminated employee would have arguably and knowingly engaged in the transparent misconduct. • Add additional language along t h e l i n e s o f c r e at i n g g r e at e r certainty of the foregoing that the employee continues to be entitled to all their applicable entitlements required under the ESA or any other applicable legislation and is not precluded from any of the employee's applicable entitlements required under the ESA or any other applicable legislation. • In the Abrams case, the offended language violating the ESA was "shall not be obliged to make any further payments" so it limited the full entitlement of the ESA. Accordingly, additional language may have been helpful to save the provision that would include some clarity language that the employee, terminated without cause, will be limited to receiving full entitlement of salary, benefits and all other entitlements during the notice period that they would have received had they worked during the notice period. CHRR JACK BRAITHWAITE Counsel Weaver Simmons in Sudbury, Ont. EMPLOYERS

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