In Bergeron v Movati Athletic ( Group ) Inc. ( 2018 ONSC 885) Justice O’Bonswain found that the following termination clause was not enforceable :
Movati Athletic Inc. may terminate your employment without cause at any time during the term of your employment upon providing you with notice or pay in lieu of notice, and severance, if applicable, pursuant to the Employment Standards Act, 2000 and subject to the continuation of your group benefits coverage, if applicable, for the minimum period required by the Employment Standards Act, 2000, as amended from time to time.
The judge’s main criticism was the clause does not make clear that the common law right of reasonable notice was clearly excluded.
Then for some reason , the Judge redrafted the clause and said if it had been like this, then it would have been upheld.
Movati Athletic Inc. may terminate your employment without cause at any time during the term of your employment upon providing you with notice or pay in lieu of notice, and severance, if applicable, only pursuant to the Employment Standards Act, 2000 and subject to the continuation of your group benefits coverage, if applicable, only for the minimum period required by the Employment Standards Act, 2000, as amended from time to time.
I do not believe that this was a good idea, for the following reasons:
First of all I can spot at least these problems with the new clause drafted by the judge :
- The ESA standard for excluding termination pay and severance pay is is not just cause but rather the higher standard of wilful misconduct.
- The reference to ” only for the minimum period required by the Employment Standards Act” seems to only apply to the benefit extension period, not termination and severance pay. This is at least ambiguous.
- The extension of benefits” subject to the continuation of your group benefits coverage” would infer that if the insurance provider has a clause which precludes for coverage immediately upon the termination of employment ( which is common ) then this clause would deny coverage for the termination period, which is a violation of the ESA.
Second, this Judge is saying to employers that if you use this clause you will win. This may limit the degree by which other judges view future similar clauses as it looks as if this one has been sanctified by the Courts.
Third, it is undoubtably the role of the Courts to rule on the legality of existing contract language and to give guidance for future drafters. However I think that the Courts go too far when they assume the role of drafters of contract clauses. We all know that employers draft employment contracts, especially ESA limiting agreements. Why should the role of the Courts be to actually draft contract clauses that encourage employers to limit employee termination entitlements to the statutory minimums? Why not instead encourage employers to draft clauses that mimic the common law entitlement?
Court are supposed to be the arbiters in employment law disputes, not advocates for one side.Employers in Ontario have access to excellent management counsel who know how to draft fair and binding employment agreements. Drafting is their job, not the Courts. If they get it right they win. If they get it wrong they lose.