Canadian HR Reporter, 2021
Canaan grew in size, employing more than
50 employees and then discontinued its
business, or else had a payroll more than
$2.5 million, Rutledge would be entitled
to severance pay, irrespective of his job de
-
scription," said the court. "The employment
contract clearly disentitles Rutledge to these
employment standards."
The court concluded that even a potential
violation of the ESA should be unenforce
-
able, even if the change of that violation is
remote. In this case, the termination provi-
sions in Rutledge's employment contract
"purported to contract out of the ESA in at
least two ways," said the court.
Bottom line for employers
Rutledge v. Canaan
reminds employers that
they certainly have a threshold to meet when
drafting termination provisions in employ-
ment agreements. Even if an employment
standard does not currently apply to an em-
ployee, an employer must consider even a
remote possibility of the ESA employment
standard potentially applying in the future.
Accordingly, when drafting termination
clauses in employment agreements, employ
-
ers should consider current circumstances as
well as hypothetical future circumstances. A
termination provision that purports to deny
an employee rights under employment stan-
dards legislation to which they might po-
tentially be entitled in the future will raise
issues of enforceability if challenged.
We will have to see if subsequent deci-
sions support the notion that the degree
of remoteness of a potential ESA violation
does not matter. Regardless, employment
contracts should be updated on a regular
basis because the law of termination clause
compliance is constantly evolving.
For more information, see:
•
Rutledge v. Canaan Construction Inc.,
2020 ONSC 4246 (Ont. S.C.J.).
February
10,
2021
|
Canadian
Employment
Law
Today
CREDIT:
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ABOUT THE AUTHORS
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.
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.
