In Chan v NYX Capital Corp ( 2025 ONSC 4561) Justice Parghi had to determine the enforceability off this termination clause:
10. Termination
Your employment with the Company may be terminated as follows:
(a) The first three months of your employment are probationary, during which time the Company may terminate your employment at any time and for any reason at its discretion, without notice or pay in lieu of notice, or other obligation.
(b) You may resign from your employment at any time and for any reason upon providing the Company with two weeks of notice in writing of your resignation, which notice may be waived by the Company in whole or in part at its sole discretion save as may be required under the ESA.
(c) After you successfully complete the first three months of your employment, the Company may terminate your employment at any time without cause, upon providing you with notice, or pay in lieu of notice, benefits continuation and severance pay (if applicable) and any other benefits or entitlements strictly required in accordance with the minimum requirements set out in the ESA. It is agreed and understood that the provision of such notice or pay in lieu of notice, severance pay (if applicable), benefits continuation and any other benefits or entitlements required under the ESA shall constitute full and final satisfaction of any claim which you might have arising from or relating to the termination of your employment, whether such claim arises under statute, contract, common law or otherwise, save any claim that cannot be released by operation of a statute of Ontario.
(d) The Company may terminate your employment at any time for cause, without any obligation to you on account of notice or pay in lieu of notice, severance pay, or other obligation, other than accrued amounts owed to the date of termination.
The Judge found this clause to be illegal for the following reasons:
- “At any time” and “for any reason ” were illegal . quoting Dufault v. The Corporation of the Township of Ignace, 2024 ONSC 1029, andBaker v. Van Dolder’s Home Team Inc., 2025 ONSC 952,.
- ” At any time for cause ” is illegal quoting Waksdale v. Swegon North America Inc., 2020 ONCA 391,
For a copy of this case, email me at barry@barryfisher.ca
To book a mediation, go to my online calendar at www.barryfisher.ca
To access the Wrongful Dismissal Database, go to www.wddonline.ca
Under the Unanimous Shareholder Agreement, he was required to sell his shares to the Company immediately upon his termination based on the value that day. This was done and upheld under an arbitration award.
All the shareholders were also employees. The parties had set up a system whereby the shareholder/employees were paid both by salary and dividends .
The issue was whether the Plaintifff was entitled to the dividends he would have received had he been employed over the 26 month notice period.
In Ontario, the case of Mikelsteins v Morrison Herschfield Limited, 2021 ONCA 1555 stands for the proposition that when dealing with the issue of interpreting corporate documents you do not apply the principles of employment contract interpretation. Therefore where the shareholders agreement says that your rights end upon the termination of employment , that means the day you receive notice of termination. However applying a employment law analysis this same language would be read as if is said upon the date of the lawful termination of employment, which is at the end of the notice period.
The Alberta Court clearly rejected this interpretation:
[71] In my respectful view, this is not consistent with either the law in Alberta or the Supreme Court’s direction in Matthews as to the legal characterization of when employment terminates and the appropriate analysis to consider an employee shareholder’s claims. I disagree that an individual shareholder, whose ability to hold shares is tied to their employment in any fashion, can be dealt with simply as a corporate law matter. This places the interests of the corporate employer above those of the employee, which is not consistent with the balance between employees and employers established over decades of employment law, a balance that is maintained by the required analysis set out in Matthews. Therefore, I decline to follow the Ontario line of cases.
As a result the Plaintiff received $948,000 for this issue alone.
If you like a copy of this case email me at barry@barryfisher.ca
To book a mediation go to my online calendar at www.barryfisher.ca
To access the Wrongful Dismissal Database go to www.wddonline.ca