In Brown v General Electric Canada ( 2025 MBCA 37 ) the Court had a situation where, as a result of a merger , the employee was offered a comparable  job with the new company. The Plaintiff refused the offer. The Plaintiff was then terminated. The new company did not renew the offer which was previously rejected.

The Court found that this refusal constituted a failure to mitigate .

This is what they said :

(c)           The judge discounted the significance of the timing of the Wabtec offer occurring before the termination because he drew an inference on the evidence that Wabtec would have re‑extended its offer to the plaintiff after the termination if there was any suggestion the plaintiff changed his mind, as Wabtec wanted the plaintiff to continue in his employment and took no steps to fill the position (see Brown at paras 55-56).

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In Boyle v. Salesforce.com, 2025 ONSC 2580 Justice Brownstone was faced with the following Termination Clause:

6 (b) Cause

The Company has the right, at any time and without notice (or pay in lieu), to terminate your employment under this Agreement for Cause. In the event that you are terminated for Cause, the Company’s obligation shall be limited solely to the payment of any portion of the Base Salary, and vacation pay, if any, that shall have been accrued by you prior to the date of termination.

Cause is defined in schedule A of the agreement as “any act or omission by you that would in law permit the Company to, without notice or payment in lieu of notice, terminate your employment.”

The company is regulated by different local laws where it operates globally. If there is a conflict in these laws, you should consult the Company’s legal department to resolve the conflict appropriately. In general, local laws will apply.

Except for certain non-U.S. jurisdictions, the Company’s employment relationship with all of its employees is one of employment “at will,” which means that employment may be terminated by either the employee or the Company at anytime, with or without cause. If you are located outside of the U.S. and have an employment agreement, the terms of those agreements will prevail if there is any conflict with the policies in this handbook. However, all other policies will apply.

The policies in the Global Employee Handbook are not a contract and that my employment is “at will.” This means that the Company or I can end my employment at any time with or without cause or advance notice.

The Judge found that this provision was illegal :

25]        In my view, applying the governing principles to this contract clearly results in the unenforceability of the termination provisions. There is no practical way that an employee in Ontario could be aware, when signing the contract, of the terms that would govern his termination. The ambiguity contained in the documentation, all of which Mr. Boyle was required to sign prior to commencing employment, is explained by Salesforce’s choice to use one contract for employees in many jurisdictions. Salesforce repeatedly claims to be able to terminate employment at will. It then says that this provision will not apply in certain jurisdictions outside of the U.S. If the employee is uncertain, he should consult the Company’s legal department. It is impractical to expect a potential employee, who has not yet started employment, to consult the future employer’s lawyer before signing an employment agreement to understand what kind of misconduct, if any, is cause for termination.

26]        I therefore find the provision is not compliant with the ESA, or at least ambiguous as to whether it is complaint, and is therefore unenforceable. Mr. Boyle is entitled to payment in lieu of reasonable notice.

My Comments :

This case illustrates the importance of designing specific termination clauses for each jurisdiction in which an employee resides and works. One size does not fit all. Especially Ontario.

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In Brink v Xos Services (Canada), Inc., 2025 BCSC 658 (CanLII) Justice Hughes had a situation where the parties agreed on the settlement number

(  $441,667.00 USD ) but the defence offer was based on ” less statutory deductions” and the plaintiff accepted the offer on the condition that it be on the basis that it be treated as non employment income.

In Canadian terms this would be asking that the settlement funds be treated as ” general damages” which apparently attracts no taxation.

This is why the Judge ruled that there no settlement :

“However, the tax treatment of the settlement payment was a condition of fundamental importance to both parties. As an employee, the plaintiff was typically taxed at a rate of around 32% which, if applicable to the settlement funds, would result in a tax deduction of up to $143,300. The plaintiff sought the full settlement amount with no source deductions. The defendants offered to pay the settlement amount less applicable deductions, to avoid any negative tax implications for them. This is a significant gap that cannot be overlooked or resolved by resorting to common sense or common practice, as was discussed in Fieguth.”

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I previously reported on a case called De Castro v. Arista Homes Limited
in which the trial Judge found that the following clause breached the ESA ands therefore unenforceable:

“If you are terminated for Cause or you have been guilty of wilful misconduct, disobedience, breach of Employment Agreement or wilful neglect of duty that is not trivial and has not been condoned by ARISTA, then ARISTA will be under no further obligation to provide you with pay in lieu of reasonable notice or severance pay whether under statute or common law.

For the purposes of this Agreement “Cause” shall include your involvement in any act or omission which would in law permit ARISTA to, without notice or payment in lieu of notice, terminate your employment.”

The Employer had a somewhat convoluted interpretation of how this clause could be read to be consistant with the ESA.

The Court of Appeal said that the judge’s interpretation was correct.

What is interesting is what they said about the methodology of how Courts are to approach these cases.

[14]    Finally, the motion judge’s approach reflects a careful application of established principles governing the interpretation of employment contracts. Courts have recognized that such contracts are generally interpreted differently than other commercial agreements to protect the interests of employees: see Wood v. Fred Deeley Imports Ltd., 2017 ONCA 158, 412 D.L.R. (4th) 261, at paras. 26-28. Employees have less bargaining power than employers. Furthermore, employees are far less likely than employers to be familiar with the standards dictated by the ESA.

[15]    Because the ESA is “remedial legislation, intended to protect the interests of employees”, courts are to adopt an interpretation that best achieves this objective: Wood, at para. 28. That means an interpretation that “encourages employers to comply with the minimum requirements of the Act” and “extends its protections to as many employees as possible”: Machtinger v. HOJ Industries Ltd., 1992 CanLII 102 (SCC), [1992] 1 S.C.R. 986, at p. 1003. The contract is to be read as a whole, with any ambiguity construed in favour of the employee.

The Court of Appeal decision can be found at l(2025 ONCA 260).

In other words, if there are two possible ( presumably reasonable ) interpretations of a termination clause, we are to always favour the one that  favours the employee.

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In Miller v. Alaya Care Inc., 2025 ONSC 1028 (CanLII) Justice Carroccia had a situation of a 62 year old VP making over $250K with only 7 months service who was terminated without cause. Having set aside an illegal termination clause, the Judge focussed on the issue of whether the Plaintiff had been induced to leave her previous job of 12 years and if so, what effect that would have on the notice period.

First the Judge listed these factors to consider :

1. the reasonable expectations of both parties;

2. whether the employee sought out work with the prospective employer;

3. whether there were assurances of long-term employment;

4. whether the employee did due diligence before accepting the position by conducting their own inquiry into the company;

5. whether the discussions between the employer and prospective employee amounted to more than the persuasion or the normal “courtship” that occurs between an employer and a prospective employee;

6. the length of time the employee remained in the new position, the element of inducement tending to lessen with the longevity of the employment; and

7. the age of the employee at termination and the length of employment with the previous employer.

Applying these factors to this case, the Judge said as follows:

[88]        In my view, these discussions initiated by the defendant go beyond the normal “courtship” between an employer and prospective employee and amount to an inducement. The following circumstances support this finding:

1.     The defendant reached out to the plaintiff first.

2.     There were representations made by AlayaCare that the plaintiff’s experience would assist in “growing” the company.

3.     Inquiries were made by AlayaCare as to the extent of the plaintiff’s renumeration with WellSky ( her previous employer of 12 years, editors note) , including bonuses and RSUs so that they could “lure” her.

4.     AlayaCare had hired a number of people in 2021 as part of an “aggressive growth strategy”.

5.     The defendant was prepared to go as far as indemnifying the plaintiff in the event that her previous employer commenced litigation against her for leaving them to join AlayaCare.

[89]        As a result, I find that there were inducements offered to the plaintiff to lure her to leave her employment with WellSky to become an employee of AlayaCare. This factor favours a longer period of notice.

My comments :

Inducement is often pleaded but it rarely works. This case sets out the type of evidence that is needed to prove inducement .

Under most circumstances a 13 year Senior Executive who was 62 years of age would receive a notice period greater than 14 months. On the other hand, without inducement, a 7 month employee would never get 14 months notice.

Inducement seems to give you a notice period greater than your actual employment with the defendant but less than the combined service of the two employers. This recognizes that the Plaintiff is always taking a risk with a new employer but that no reasonable person would leave a secure job of long service without the expectation that the new job would last some significant period of time.

I do not usually list who the winning lawyer is, but in this case I make an exception because Plaintiff’s counsel was none other than this years winner of the Ontario Bar Association Randall Echlin Award for Excellence in Labour and Employment Law, Stephen Moreau of Cavalluzzo LLP.

Bragging Note : I was the recipient of this award last year.

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In Ramotar v Trader Corporation ( No Canlii cite yet ) Deputy Judge K. Qureshi of the Toronto Small Claims Court reviewed a termination provision which had the following language :

“If your employment is terminated without cause, the Company will continue your group insurance benefit coverage for such period as the Employment Standards Act, 2000 shall require, provided such coverage is available from the insurer.”

The Deputy Judge found that as the employee would still be entitled to payment in lieu of such benefits if the insurance company did not cover the claim, the whole clause was illegal as it was not in compliance with the ESA.

My Commentary;

Presumably the Deputy Judge was referring to Section 60 (1) (c) and (3) of the ESA which reads as follows:

60.(1) Requirements during notice period. During a notice period. required under Section 57 or 58, the employer,

(c) shall continue to make whatever benefit plan contributions would be required to be made in order to maintain the employee’s benefits under the plan until the end of the notice period .

(3) Benefit Plan Contributions : If an employer fails to contribute to a benefit plan contrary to clause (1) (c), an amount equal to the amount he employer should have contributed shall be deemed to be unpaid wages for the purpose of Section 103.

Note that the employer is not required to provide the coverage, only to pay the premium cost to the insurance company.

But if the employer fails to make the necessary premium payment and as a result the employee incurs an expense or a loss that would have been covered , then the employee can pursue a civil action against the employer. I once had a case where the employer failed to continue my clients’ $100,000 life insurance policy after his termination. My client died during the ESA notice period and after the insurance company denied coverage, we successfully sued the employer and got them to pay the $100,000.

This obligation to maintain benefits continues under the common law throughout the reasonable notice period. This can lead to huge negative consequences when an employee becomes disabled during the common law notice period. The employer cannot, under the terms of most group disability plans , continue to provide for LTD coverage after the statutory notice period. Therefore if the employee were to become totally disabled during the common law notice period, the employer steps into the shoes of the LTD insurer and is on the hook for what could be a sum well in excess of responsible notice.

See Prince v. T. Eaton Co. Limited, 1992 CanLII 5968 (BC CA)

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In Singh v Clark Builders, 2025 ABKB 3 Justice Becker Brooks had a situation where the employer alleged just cause and therefore did not pay the 90 day contractual severance clause in the contract.

The Judge found that there was no just cause.

Could the employer still rely on the 90 day clause or did they repudiate the contract and thus have to pay common law notice, which in this case was held to be 12 months ?

First the Judge accepted these 4 principles :

1. 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.
2. 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.
3. 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.
4. 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.

The Judge then ruled as follows:

[92] An employer’s failure to establish just cause will not disentitle the employer from enforcing an otherwise valid without cause termination provision provided the allegations of just cause are made in good faith: Simpson v Global Warranty, 2014 ONSC 6916 at para 8.

[93] In my reading of the authorities surveyed in Humphrey, provided there is a good faith basis for the employer to allege just cause, both at termination and during litigation, an employer who subsequently decides not to pursue just cause or is unable to prove just cause, is notprecluded from relying on a without cause termination provision.n

[94] The good faith requirement means the allegation of just cause cannot be brought dishonestly or for an improper, dishonest, or fraudulent purpose.

My Comments :

The process would seem to unfold as follows:

1. If just cause is alleged initially but dropped before trial and the defendant subsequently pays the contractual severance, the issue would be whether the initial allegation of just cause was made in good faith.
2. If just cause is alleged and not dropped and then the Court finds that there was no just cause, the issue would be whether the allegation, although not proven, was made in good faith.
3. Remember this is only relevant where the without cause termination clause is valid.
4. It appears that this may be the same analysis in a constructive dismissal case. Therefore even if the plaintiff wins the constructive dismissal argument, unless they can show that the employer acted in bad faith, they will be limited to their contractual severance, not common law notice.

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In Timmins v. Artisan Cells ( 2024 ONSC 7123 Justice Callaghan had a situation where the employment contract called for a payment of 3 months pay upon a without cause dismissal. The contract did not require the employee to sign a release.

The employer refused to pay that amount unless the Plaintiff signed a release, which he refused to do. The employer then only paid one week of termination pay, even though the ESA minimum entitlement was 3 weeks.

The Court found that the employer had repudiated the contract and therefore could not rely on the termination clause. The Plaintiff was therefore entitled to common law reasonable notice.

The Court then awarded 9 months notice to the 44 year old Vice President who had 3. 5 years service.

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In Dufault v. Ignace (Township), 2024 ONCA 915 [25] the Court of Appeal dismissed the appeal by the Town of Ignace in seeking to overturn the trial decision which held that the termination clause was illegal and thus unenforceable .

The Court upheld the trial judges decision that the clause was illegal because of the reasoning of the Court of Appeal in Waksdale v. Swegon North America Inc., 2020 ONCA 391.

Of more importance is what they did not do :

“Given our conclusion that the “for cause” termination clause of the employment contract is unenforceable as contrary to the ESA and that, pursuant to Waksdale, this renders all of the termination provisions unenforceable, it is not necessary to consider the appellant’s arguments that the motion judge erred in finding the “without cause” termination clause also unenforceable as contrary to the ESA, and we expressly do not rule on that submission. The appellant argued that the motion judge’s findings in relation to the “without cause” termination clause may affect other employment contracts. In our view, resolution of the issues the appellant raises regarding the “without cause” termination clause should be left to an appeal where it would directly affect the outcome. “

My Comment:

In my opinion the Court did what they should have done, which is not to comment on issues that would not have changed the outcome. From a practical point of view this means that the “sole discretion ” and the ” at any time ” arguments will continue to be raised in future cases.

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