Court Upholds Severability Clause in Termination Provision:

In Waksdale v Swegon North America ( 2019 ONSC 5705) Morgan J. had a situation where the employment agreement had two separate termination clauses; one for just cause terminations which violated the Employment Standards Act and one for without cause terminations which did not violate the ESA.
There was also a severability clause applicable to the entire contract.
The plaintiff was terminated without cause and paid out in accordance with the contract. The Plaintiff argued that the illegality of the just cause clause made the entire termination provision, including the without just cause part, illegal and unenforceable.
The Judge said no, the clauses were distinct and only the just cause clause was void and since the defendant was not relying on that clause, its illegality was irrelevant.
I am advised by Plaintiff’s counsel that they will be appealing.

SCC Just Heard case of Matthews v. Ocean Nutrition Canada Limited. My First Impressions :

This morning the SCC heard this case which deals with exclusionary clauses in employment contracts. In essence the plaintiff would have received over one million $ had he been permitted to work through his 15 month notice period but for the language of the contract. The employer had been found to have acted in bad faith.

The SCC seemed to be thinking about the various issues.

1. If the contract language itself did not purport to allow the employer to act in bad faith , would the exclusionary clause itself even apply?

2. Can a contract even purport to allow one party to act in bad faith ?

3. If the essence of a wrongful dismissal action is the failure to allow the employee the right to work through the notice period , then should not the calculation of the damages be the same as if the employee had been permitted to so work?

4. It is not in dispute that an employer may limit the length of the notice period, but can they also exclude certain items of compensation from being considered in that time frame?

5. Is extending Bhasian to the performance of an employment contract, not just to the manner of the dismissal, too big a step at this time ?

Kudos to Howard Levitt, Andrew Monkhouse , Stacey Ball and Tim Lawson for their very interesting arguments .

More comments to follow in future blogs

Employee Presumptively Entitled to Back Pay to Date of Hearing Under CLC:

In Curran v MAG Aerospace ( 2019 CarswellNat 4803) Adjudicator Sinding was called upon the determine the proper remedy for an unjust dismissal where the employee did not seek reinstatement.

He made a few interesting findings:

1) Adjudicators are not limited to only awarding common law reasonable notice.

2) There is a presumption that the employee is entitled to be compensated up until the date either the hearing or the decision.

3) The calculation of the lost wages takes into account the deduction of mitigation earnings, even if the underlying contract was a fixed term.

4) To prove damages beyond this date requires real proof of lost future earnings and will always have a end date.

Wallace Damages Has Two Components :

In Headley v City of Toronto ( 2019 ONSC 4496 ) Sanderson J. awarded 18 months notice to a 40 year old Shift Supervisor at a homeless shelter who had been employed for 15 years .
Having found that the Plaintiff was unjustly dismissed due to false allegations of theft, the judge also awarded Wallace damages on two separate grounds:
First, $15,000 for the mental distress raising from the manner of dismissal.
Second ,$50,000 for the tangible financial loss caused by the manner of the dismissal as the false accusations of theft impaired his ability to find comparable employment . This is what the judge said :
Wallace Damages for Loss of Income
402      I am satisfied that the unfair allegations that Headley had committed theft, the City’s unfair dismissal on unsubstantiated suspicion of theft, fraud and wilful dishonesty, Anstett’s refusal to respond to his calls so he could request a letter of reference from his immediate supervisor and the inevitable cloud created by that unfairness have foreseeably led to tangible financial loss of income in the ensuing years. Hopefully this Judgment will dispel that cloud.
403      Almost seven years have passed since the termination. Despite having made what I have found were reasonable efforts, Headley has not succeeded in finding a comparable managerial position. At the time of the trial he was still earning roughly half the total income he was earning in June 2012. With the cloud lifted, I expect that Headley will now be able to find a comparable managerial position.
404      I have found that his employment history before the termination illustrates that he was highly motivated, consistently employed, often for more than 40 hours per week. He also volunteered and provided mentoring to others. But for the unfairness in the manner of his termination, including the unfounded allegations of theft, fraud and dishonesty, I find Headley would have had little difficulty obtaining a comparable managerial position and earning comparable income to the income he earned prior to June 25, 2012.
405      Given the guidance given by Iacabucci J. in Wallace that “if the manner of termination affects employment prospects” it may be worth of considerably more compensation” and given the direction of Bastarache J. in Keays that such damages are to be awarded, not by an arbitrary extension of the notice period but through an award that reflects the actual damages, this Court must attempt to assess the actual damages/tangible financial loss caused by the unfair manner of dismissal.
406      The financial consequences to Headley and his family of the manner of his termination have been significant.
407      Bearing in mind the need to avoid duplication by reason of his receipt of damages as a result of the dismissal under the previous heading, I award $50,000 for tangible financial loss caused by the unfair manner of his dismissal.
Lawyers often seem to forget this important aspect of Wallace Damages as they tend to focus on the mental distress element of the case. This case shows that it may be much more profitable to focus how the manner of the dismissal adversely affected the plaintiff’s employability.
I remember  reading about a US case in which the dismissed employee claimed damages for self defamation. In that case he had been falsely accused by his ex employer of theft. The Plaintiff claimed that when he went on job interviews after his dismissal and was asked why was he fired, he was forced to tell the truth by saying ” I was falsely accused of theft “. Not surprisingly, although the interviewer might have appreciated his candour, that comment turned out to be a job killer. His damages were the lost opportunity to land another job.

Doing Zilch re Mitigation Reduces Notice Period from 14 to 12 Months :

In Seykors v Rural Municipality of Lake Lenore ( 2019 SKQB 225 ) Richmond J. reduced the notice period by 2 months where the Plaintiff’s mitigation efforts were minimal and he had not applied for even one job.

Why such a minimal reduction you may ask ?

1) The Plaintiff was age 65.

2) He was a snowplow operator.

3) He didn’t finish high school.

4) He lived in a rural area and was not expected to have to move.

Release of Previous Employer Has No Effect on Termination By Subsequent Employer :

In Manthadi v ASCO Manu ( 2019 ONSC 5572) Fowler Byrne J. had a situation where a 64 year old welder had over 36 years with Company A. Company A sold its business to the Defendant. Company A paid the plaintiff her 8 weeks under the ESA and she signed a release. The defendant immediately hired her on the closing date . She was terminated a few months later.
The Defendant claimed that she was only an employee for a few months.
The judge held that in accordance with Sec 9(1) of the ESA her employment was continuous and therefore for purposes of the ESA she was a 36 year employee. The judge also held that as the Release did not name the Defendant but rather named Company A , it was no effect in regards to her dismissal from the Defendant. She was awarded 20 months notice, with no credit for the 8 weeks termination pay that she got from Company A.
The Judge commented on the common law element of the case as follows:
35      The law also supports this concept of continuous employment for the purposes of common law entitlement to damages for wrongful dismissal: Addison, at para. 22; Violo v. Delphi Communications Inc., 2014 ONSC 7008, at para. 16. Further, as stated in Ariss (ONSC), at para. 38:
If the statutory protection were not enough, Ariss also has the protection provided by the common law. There is nothing in any of the documents executed in 2002 to suggest that NORR intended that former DTM employees would not be credited for their years of service with DTM. Most important, there is nothing to that effect in the offer letter signed by Ariss. In the absence of notice from NORR that Ariss would not be credited for his years of service with DTM, recognition of that service is deemed to be part of Ariss’ contract of employment with NORR (Vinette v. Delta Printing Limited, 2017 ONSC 182, 278 A.C.W.S. (3d) 756, at para. 21).
Q: Therefore how is a purchaser supposed to protect themselves ?
A: Easy.
The new employer should have an employment agreement with the employee stating that for the sole purpose of the ESA , the employee’s prior service will be recognized but that for the purposes of determining any other issue, including their entitlement to common law notice of termination, the start date of the employment is the date of this employment contract.
Remember, now that the ESA provides for an escalation of vacation pay based on years of service, this provision also recognizes prior service.
The good news for the Vendor  is that because the service is deemed to be continuous, they have no obligation to pay either termination pay, severance pay nor common law notice to their  ex-employee.