In Hampton Securities v Dean ( 2018 ONCA 901) the Ontario Court of Appeal was called upon to determine the validity of the following clause :
In the event Hampton wishes to terminate your employment without cause they may do so by paying you the minimum amounts required pursuant to the Employment Standards Act of Ontario in force at the time of termination; no further compensation shall or will be provided. You agree by signing this agreement that such amounts are the total compensation you will receive if terminated without cause.
Both the trial judge and the Court of Appeal held that this clause was illegal because it excluded benefit continuation for the ESA termination period, which in this case was only 2 weeks .
It rejected the Employer’s argument that the words “ by paying you the minimum amounts required pursuant to the Employment Standards Act ” included benefits.
On this point the Court said:
106 The obligation Hampton has imposed on itself is to “pay you”, that is to say to pay Ms. Dean. Benefits are not paid to employees. They are paid to benefit plans. Even if Hampton purported to fulfil its obligations by paying Ms. Dean the equivalent of the contribution that Hampton would ordinarily have made to a benefit plan, that does not comply with section 60(1)(c) of the ESA. The statute clearly requires that the employer continue to make contributions to benefit plans during the notice period. Hampton’s obligation under the employment contract is only to make payments to Ms. Dean.
107 As in Wood, the provision in the employment agreement to the effect that “no further compensation shall or will be provided” excludes contributions to benefit plans. The contrast between the language “paying you” and “no further compensation shall be provided” is telling. The first phrase, refers to payments to Ms. Dean. The second phrase is more broadly worded and captures within its ambit, payments to parties other than Ms. Dean, such as payments to benefit plans.
108 As both the Court of Appeal noted in Wood and the Supreme Court of Canada noted in Machtinger, only a clearly worded termination clause will rebut the presumption of reasonable notice. Even if Hampton now wanted to argue that the contract obliged it to continue making payments to benefit plans during the statutory notice period, that would not assist. The analysis is to be conducted based on the language of the employment agreement at the inception of employment, and not based on the interpretation the employer wants to apply after litigation has arisen when it has an interest in interpreting the clause more generously in order to avoid common law notice requirements.