Canadian Employment Law Today

May 5, 2021

Focuses on human resources law from a business perspective, featuring news and cases from the courts, in-depth articles on legal trends and insights from top employment lawyers across Canada.

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©2021 Key Media Canada (HR) Ltd., a subsidiary of Key Media KEY MEDIA and the KEY MEDIA logo are trademarks of Key Media IP Limited, and used under licence by Key Media Canada (HR) Ltd. CANADIAN EMPLOYMENT LAW TODAY is a trademark of Key Media Canada (HR) Ltd. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of the publisher. The publisher is not engaged in rendering legal, accounting or other professional advice. If legal advice or other expert assistance is required, the services of a competent professional should be sought. The analysis contained herein represents the opinion of the authors and should in no way be construed as being either official or unofficial policy of any governmental body. GST/HST#: 79990 3547 RC-0001 How would you handle this case? Read the facts and see if the judge agrees YOU MAKE THE CALL Published biweekly 22 times a year Subscription rate: $299 per year CUSTOMER SERVICE President: Tim Duce Editor: Jeffrey R. Smith Email: Production Editor: Patricia Cancilla Business Development Manager: Fred Crossley Email: Phone: (416) 644-8740 x 236 NAUK Subscriptions Co-ordinator: Donnabel Reyes Email: Phone: (647) 374-4536 ext. 243 THIS INSTALMENT of You Make the Call fea- tures a worker who was fired after less than a year of service and contested the termination clause in his employment agreement. The 54-year-old worker was hired by Crys - tal Claire Cosmetics, a cosmetics company based in Toronto, in September 2018 to be its warehouse manager. At the start of his employment, the worker signed an employ - ment agreement that contained a termination clause. The clause provided Crystal Claire with the right to terminate the worker's employment without notice or payment in lieu of notice if he engaged "in conduct which constitutes just cause for summary dismissal." It also allowed for termination without cause, stating that the company could terminate employment "at any other time and for any reason upon providing you with either advance notice and/or applicable payments equivalent to the minimum applicable entitlements contained within the ESA [Employment Standards Act], as amended." It further clarified that "Crystal Claire's maximum liability to you for com - mon law notice, termination pay, severance pay, or payment in lieu of notice shall be lim- ited to the payment of the amounts specified in the ESA." The worker's employment with Crystal Claire lasted only until July 15, 2019, when the company terminated him without cause. It paid him one week's salary in lieu of notice and benefits continuation, the minimum enti - tlement under the Ontario Employment Stan- dards Act, 2000. The worker found a new job three months later, but he filed a claim for wrongful dismiss- al, claiming the termination clause was unen- forceable and that he was entitled to common law reasonable notice of termination. Crystal Claire disputed the claim, arguing that the termination clause allowed for the minimum statutory entitlements and, therefore, com - plied with the ESA. YOU MAKE THE CALL Was the termination clause unenforceable? OR Did the termination clause legally restrict the worker's notice entitlement to the statutory minimum? IF YOU SAID the termination clause was un- enforceable, you're right. The court noted that the termination clause permitted Crystal Claire to avoid providing notice or pay in lieu of if an employee "engages in conduct which constitutes just cause for summary dismissal." The ESA regulations state that employees who are "guilty of wilful misconduct, disobedience or wilful neglectful duty that is not trivial and has not been condoned by the employer" are not entitled to reasonable notice, but case law has established that "just cause" can be made with a lesser standard than wilful misconduct or disobedience. However, the termination clause didn't spe - cifically refer to just-cause dismissal as a way to avoid a notice entitlement. It referred to "sum- mary dismissal," which means a termination that is carried out quickly and efficiently," the court said, adding that "the potential speed and manner of an employee's dismissal does not necessarily lead to a conclusion that the employee was guilty of wilful misconduct and disobedience." "[Crystal Claire] is the drafter of the agree - ment, and thus had the opportunity to en- sure that provisions of its termination clause properly delineated the threshold of 'wilful misconduct or disobedience' to justify non- payment of notice," said the court. "The ter- mination clause expressly fails to do so, and I am not prepared to accept one of several po- tential implied interpretations to render the clause enforceable." The court also found that the termination clause made no mention of benefits continua- tion, as it required the company to pay the work- er his minimum termination pay but not the value of his benefits during the minimum notice period. This also made the clause unenforceable. Without a restriction on the worker's com- mon law notice entitlements, the court deter- mined that the worker's age, senior position, supervisory role and job functions entitled him to three months' notice for his 10 months of service. Since the worker didn't find new employment until three months after his dis - missal, there was no reduction of the damage award on that count. For more information. see: • Ojo v. Crystal Claire Cosmetics Inc., 2021 ONSC 1428 (Ont. S.C.J.). Summary dismissal isn't so quick The termination clause provided the right to terminate for 'just cause for summary dismissal.' The speed of dismissal doesn't mean there was wilful misconduct. CELT_Issue_30 MAY 5 FINAL.indd 8 CELT_Issue_30 MAY 5 FINAL.indd 8 4/21/2021 4:04:08 AM 4/21/2021 4:04:08 AM

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