This Case Has it all : Reasonable Notice, Moral Damages, Sex Discrimination under the OHRC, Defamation and Punitive Damages:

In McGraw v Southgate ( Township) 2021 ONSC 7000, Justice Chown had a situation where a female fire captain and admin assistant to the Chief for a volunteer fire department was terminated without cause because of many rumours in the workplace that she, among other things, sent nude photos of herself to various male firefighters, was having affairs with various male firefighters, including the Chief, was texting excessively with a male firefighter, was causing other firefighters to quit, caused morale problems in the workplace, gave passing grades to male firefighters in a course she taught if they had sex with her, helped  a firefighter cheat on a test, and was the subject of rumours from other fire departments.

This was the explanation that the CAO gave to Council on why he  had decided to terminate the Plaintiff’s employment. This evidence came in because the Council routinely recored its closed sessions and the Judge ruled that the part of the transcipt that related to the resons for her dismissal were not privileged.

None of these “rumours ” turned out to be factually correct.

In a scathing decision the Court went on to award the Plaintiff (in addition to 6 months notice) the following sums equalling $190,000:

Moral Damages : $75,000
Discrimination: $35,000
Defamation: $20,000
Punitive Damages $60,000

Saving Clause Does Not Save an Illegal Contract:

In Campbell-Givons v. Humber River Hospital, 2021 ONSC 6317, Justice Black had an illegal “just cause” provision in a contract which also contained the following clause just below the “without cause ” portion:

“At all times the Employee will receive all employment standards entitlements owing to her in accordance with the Ontario Employment Standards Act, 2000. ”

Citing Wood v. Fred Deeley Imports Ltd., 2017 ONCA 158 , the Court found that this clause could not validate a provision which was itself void because it violated the ESA. This is waht the Judge said:

[34] Implicit in that guidance, and brought to bear in the numerous cases that have refused to enforce termination clauses that contain any provision that violates the ESA, is the notion that, given the power and knowledge imbalance between employers and employees, there is a risk that an employer might “slip in” to an employment agreement a provision or provisions known to be beyond the narrow parameters of O. Reg. 288/01 of the ESA. That employer might hope or even expect that the employee will not be aware of the contents of that regulation. As others have noted, the mischief of a “saving” clause is that in the face of such a clause an employee might conclude that the offending provisions must be in keeping with the ESA requirements.

The Judge went on to distinguish those cases where such clauses were upheld (Amberber v. IBM Canada Ltd., 2018 ONCA 571, and Nemeth v. Hatch Ltd., 2018 ONCA 7) , because in those cases the issue was whether there was an ambiguity as to whether  common law damages were available or not, as opposed to whether the language of the clause offended the ESA.

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Another Case Confirms that the Sophistication of The Plaintiff Does Not Make an Illegal Termination Clause Suddenly Legal:

In  Campbell-Givons v. Humber River Hospital, ( 2021 ONSC 6317) Justice Black again faced the issue of the enforceability of a illegal just cause clause on a without cause termination.

In this case the Plaintiff was a Senior Labour Relations Specialist, who presumably would have a much better understanding of employment law that the average person.

In direct response to the recent decision in Rahman v. Cannon Design Architecture Inc., 2021 ONSC 5961. in which Dunphy J. did consider the sophistication of the Plaintiff in upholding a contract which violated the ESA, the Judge said :

[45] The fundamental determination, in my view, is whether or not the clause or clauses in issue violate the ESA. If it does, then the clause(s) is void, and cannot be used as evidence of the parties’ intention. 

[46] It is also problematic, in my opinion, to engage in a detailed analysis about the level of sophistication of an employee and whether or not they had time and opportunity to obtain legal advice. A termination clause cannot comply with the ESA for some employees but violate the ESA for others. It either violates the ESA or does not, and it either enforceable or not. It is a straightforward matter for an employer to incorporate clauses in an employment agreement that comply with ESA standards, and when that is not done the court should not be asked to rewrite the language of the termination provisions to achieve compliance.

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EI Tells Employers How to Fill out ROE for Vaccine Refusnicks :

This is then latest release from Service Canada :

COVID-19 vaccination

When the employee doesn’t report to work because they refuse to comply with your mandatory COVID-19 vaccination policy, use code E (quit) or code N (leave of absence). 

When you suspend or terminate an employee for not complying with your mandatory COVID-19 vaccination policy, use code M (dismissal).

If you use these codes, we may contact you to determine:
if you had adopted and clearly communicated to all employees a mandatory COVID-19 vaccination policy
if the employees were informed that failure to comply with the policy would result in loss of employment
if the application of the policy to the employee was reasonable within the workplace context
if there were any exemptions for refusing to comply with the policy

My Comment : This most likely means that if the ROE is filled out this way, the claimant will be denied EI.

It seems that the purpose behind this edict maybe twofold:

  1. To encourage employees to get vaccinated.
  2. To discourage employers from putting unvaccinated employees on layoffs pending their vaccination and expecting EI to lessen the economic effect  of this event. Remember that it is a criminal offence for an employer to lie on a ROE.

Sophistication of the Employee Does Not Affect Legality of Termination Provision :

In Livshin v The Clinic Network Canada ( 2021 ONSC 6796) Black J. had situation where the termination clause breached the ESA in that they referenced ” just cause ” as a a ground for paying no severance , which following Waksdale v Swegon, ( 2020 ONCA 391) is illegal and voids the entire termination clause, including the “not for cause” provision. In this case the Plaintiff was not only very sophisticated and was represented by counsel throughout the negotiation process, but this employment contract was part of a larger corporate deal. The Judge found that this was not relevant in determining the enforceability of the clause.

The following are some quotes from this case on this point:

[52] In the case before me, the “just cause” provision is difficult to link to anything other than the Employment Agreement itself. There is no evidence to suggest that there were specific commercial imperatives arising in the transaction specifically or the industry more generally that required TCN to be able to dismiss Livshin for just cause without notice and without regard to the provisions of the ESA. 

[53] As such, and notwithstanding the relative sophistication of the plaintiff and his representation by counsel in the Share Purchase, in my view there is no compelling reason why TCN should be permitted to rely on termination provisions that do not comply with the ESA 

[55] While, as noted, I appreciate that these principles start from a presumed power imbalance, they strike me as providing guidance which, generally speaking, is not onerous for employers to follow. 

[56] Looking to Payette, if there is some commercial imperative driving the need for a particular provision, linked to, and necessitated by, a commercial transaction out of which the employment relationship arises, and if the reason for that provision is primarily related to the commercial transaction, then it may be that there is more latitude for a provision that is on its face at odds with protective legislation. However, I expect that this will rarely be the case and, indeed, am hard-pressed to come up with examples which would permit a breach of the ESA. 

[57] In any event, there are no such imperatives here. While Livshin may be more sophisticated than many employees, and notwithstanding that he was represented by counsel, I can see no reason why the clause at issue had to be drafted in a way that on its face contravenes the ESA. Further, in my view the goal that employers be encouraged to draft clauses that comply with the ESA trumps the suggestion that Livshin may have been better able than many or most employees to recognize the potential peril.

TCN’s argument that Livshin’s representation by counsel should result in him being taken to understand the potential pitfalls of the Employment Agreement at issue here might be turned back on TCN to suggest that an employer, represented by counsel, particularly in the period after the Court of Appeal’s decision in Fred Deeley, ought to know better than to draft a termination provision that fails to comply with the ESA.

[68] Ultimately, I come to the same landing as Justice Feldman’s conclusion above in Metaswitch. That is, the employer here was free to make a legal contract that limited the plaintiff’s rights on termination to the standards set by the ESA. The employer failed to do so, and there was no commercial imperative arising from the Share Purchase that would justify such failure. To me, the encouragement of employers to comply with the ESA is the overriding goal, and if compliance is achieved it is not necessary to undertake subjective assessments of sophistication. Accordingly, I find that the termination provisions in the Employment Agreement are void. 

The Judge also found that the savings or severance clause did not work to legalize the illegal clause.

As this was a fixed term contract of three years, and because the termination clause was void , the Judge awarded the Plaintiff the balance of the fixed term , with no duty to mitigate , following the ONCA in Howard v Benson Group. ( 2016 ONCA 256).

Then without any reasons ( which may be because the Plaintiff did not argue the point) the Judge deducted the CERB payments that the plaintiff received during the balance of the term.

My Comments:

This case stands in contradiction to a case from a few weeks back from Justice Dunphy called Rahman v Cannon Design Architecture ( 2021 ONSC 5961) which I blogged about. If both cases are appealed, the Court of Appeal will have to sort this out . Otherwise we will will two cases with two different outcomes. You gotta love the common law.

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Why You Want To Get The Whole Deal Done at the Mediation, Not Afterwards:

In Peres v Moneta Porcupine Mines ( 2021 ONSC 5798) Justice Pinto had the task of determining whether or not a deal had been struck at a mediation where instead of leaving the mediation with a fully executed Memorandum of Settlement ( MOS) the parties exchanged a series of emails setting out the bare bones of the deal with the intention of finalizing it later.

This sometimes occurs at a mediation, especially at the end of a long day when everyone is tired and nobody wants to face the long and boring job of actually writing up the deal.

In this case, there was an agreement that the Plaintiff would be issued a large amount of stock options with the proviso that it was ” subject to Board approval acting reasonably”.

Then what happened? The Board of Directors met and decided the whole deal was too generous and refused to approve the settlement.

The Court found that the Employer had not provided any evidence that there was a reasonable basis for refusing to grant the stock options after its representatives at the mediation had agreed to the deal.

It therefore enforced the deal with the caveat that if specific performance of the deal was not possible then the Plaintiff would be entitled to monetary damages. In accordance with the MOS, the Court appointed the mediator as an arbitrator if there were any issues outstanding between the parties.

Here is the funny part. The MOS was to include a confidentiality clause. In his judgement the Judge of course  set out the correspondence   between the lawyers which  set out the terms of the ” confidential ” agreement. So now the entire world knows the deal!

Here are some tips on how to avoid this nightmare scenario :

  1. Since the purpose of the mediation is to settle the case, come prepared with a draft MOS with all the usual clauses and releases, leaving blanks for the monetary terms.
  2. As the mediation is proceeding and items are agreed to, add these items to your draft MOS.
  3. Be patient when the mediator says that they insist that the deal be put into a MOS  and signed during the mediation, not after.
  4. If you need approval at a mediation from a person or persons not present, tell them to make themselves available by phone as you may well be calling them later that night for approval.

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Another Bonus Clause Bites the Dust:

In Koski v Terago Networks ( 2021 BCSC 117) Justice Hori considered the following bonus language to see if it disentitled the Plaintiff to a bonus over the notice period:


Actively employed by Terago on the date of the bonus payout in 2020. For greater certainty, any statutory severance period or reasonable notice period applicable to an employee who has been dismissed by the Company (whether with or without cause) that overlaps with a bonus payout date shall not be considered as satisfying the “actively employed” requirements of the Program.

As such, employees who have been terminated or who have
resigned prior to the bonus payout date are not eligible for any bonus
payments referenced herein.

This is what the Judge found:

[60] In my view, the two provisions of the Terago bonus policy referenced above, when read together, create ambiguity. The Supreme Court in Matthews, at para. 66 cited above, makes it clear that for the purposes of wrongful dismissal damages, the employment contract is not considered terminated until after the reasonable notice period expires. If termination of the contract does not occur until after the expiry of the notice period, then it is unclear whether either of the provisions removes or limits Mr. Koski’s common law entitlement.

My Comment: The Judge seems to focus on the issue of “terminated”. Since an employee is only lawfully terminated as of the end of the notie period,( not on the date that they receive notice of termination) this clause could also mean that they do not receive a bonus for the period which follows after the reasonable notice period .

In other words ” terminated ” means ” lawful terminated”.

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If the Employer Alleges Just Cause but Fails to Prove it, Can They Then Rely on the Not for Cause Clause?

In Humphrey v Mene  ( 2021 ONSC 2539) Justice Papageogiou was faced with this issue . Here is what the judge said about the law on this issue

136      In my view, the following principles emerge from the above cases:
a. Where an employer alleges cause and fails, or withdraws its cause allegation, or repudiates an employment agreement through acts which constitute constructive dismissal, the employer is not precluded from subsequently invoking a without cause termination provision for the purpose of calculating the employee’s damages: Roden , Moore , Simpson ;
b. However, in all cases, it is a question of construction of the without cause termination provision before the Court as to whether, properly construed, the without cause termination provision applies. Such clauses are subject to strict construction: Ebert , Matthews.
c. Even if the contract, properly construed, permits an employer to terminate without cause after a failed for cause termination, there are some breaches or acts of repudiation which are so significant, or of such an order of magnitude, that they render a without cause termination provision unenforceable: Dixon . Although Dixon has not specifically been considered and accepted by appellate courts I find the reasoning compelling. All employment agreements are negotiated and agreed to on the basis of certain implied minimum expectations as to how the employer will conduct itself, the duty of good faith being one. An employee’s agreement to accept terms which significantly impact on the employee’s common law rights must be taken to be made in the expectation that the employer will comply with these minimum implied expectations. Where the employer significantly departs from such expectations, in my view, the employee should not be held to extremely disadvantageous provisions which he, she or they agreed to. This is not rewriting the contract but giving effect to what the parties must reasonably have intended.
d. However, minor or technical mistakes made in good faith by the employer will not constitute a repudiation sufficient to prevent the employer from relying upon the without cause termination provision: Amberer , Oudin.
My Comments :
In this case the Employer first alleged just cause but withdrew the allegation before trial. The court found that the Employer had so mistreated the Plaintiff that their  behaviour disentitled the Defendant from relying upon the Without Cause Termination Clause. This is what the Court said :
137      I am satisfied that in the circumstances of this case outlined above, Ms. Humphrey has established on a balance of probabilities that Men’s conduct, objectively viewed, demonstrates an intention to no longer be bound by the December 2018 Employment Agreement, thus repudiating it. The conduct which I have found includes setting her up to fail, subjecting her to a toxic workplace, embarrassing and humiliating her before co-workers and clients after her suspension, significantly exaggerating performance issues and the evidence it had in support of these at the time of termination, and alleging cause when it knew or should have known it did not have it. These are not mere technical breaches made in good faith. Men’s conduct in this case goes to the heart of the employment relationship.
138      I also find that these many acts of repudiation are of such a magnitude that Men is disentitled from relying on the Without Cause Termination Provision.
By the way, this case is a great read, if only to see how outrageous the Defendant acted and what the Judge did about it. The Plaintiff was a 32 year old COO of a start up with under three years service.
She was awarded :
12 months notice, and
$50,000 in aggravated damages and
$25,000 in punitive damages .
I can’t wait to see what the costs award looks like .
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