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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.

If you like a copy of this case, email me at barry@barryfisher.ca

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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.

For a copy of this case, email me at barry@barryfisher.ca

To book a mediation, go to www.barryfisher.ca

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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.

For a copy of the case, email me at barry@barryfisher .ca

To book a mediation go to www.barryfisher.ca

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In  Maximenko v. Zim, 2024 ONSC 5540 Justice Brownstone awarded 24 months notice to an almost 59 year old General Manager with almost 21 years service who was making approximately $160,000 / year .

In determining the appropriate bonus calculation for the notice period, the three year average was $27,725. However in the calendar year in which the Plaintiff was terminated ( March 2023) no one received a bonus.

This case was heard in September of 2024 and therefore the Judge had to deal with a year in which no bonus was paid and another year in which the bonuses had not yet been determined .

This how the Judge dealt with that issue :

[42] There is no evidence regarding 2024 annual bonuses. Zim’s suggestion of a 47 percent reduction presumes no annual bonuses will be payable for 2024. I do not accept that assumption. 2023 is the only year since annual bonuses were instituted that they have not been paid. I find it more likely than not that the annual bonuses will be payable for 2024. If this were not going to be the case, Zim is the only party that could have adduced that evidence. It did not do so. I therefore reduce the average bonus amount by 23.5 percent to reflect the lack of annual bonus in 2023.

My comments :

I would have thought that the better way to determine the bonus over the notice period would be for the remainder of 2023 ( 9 months ) she would receive no bonus, because nobody else did.

Then for the balance of the notice period ( 15 months ) apply either the pre 2023 three year average ($27, 725) or the three year average of 2023, 2022 and 2021 which is $22,663 .

This would have produced a bonus over the notice period of

$22,663 /12 X 15 = $28,328 as opposed to the $42,420 awarded by the Judge

For a copy of this case, email me at barry@barryfisher.ca

To book a mediation, go to www.barryfisher.ca

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In Wilds v. 1959612 Ontario Inc., 2024 ONSC 3452 (CanLII) Justice Vermette found multiple ESA violations in the employment contract.

In determining whether the savings clause was sufficient to offset these illegal provisions, this is what the judge said :

[64]        The last paragraph of section 15.1 of the Employment Agreement is a “saving provision”. For convenience, I reproduce this paragraph again:

It is intended that this termination provision includes any entitlements you have pursuant to the Act. In the event that your entitlements pursuant to the Actexceed these contractual provisions, those statutory provisions shall replace these contractual provisions and no further payments are required. You agree that the provision of notice, pay in lieu, or a combination of both as set out above will fully satisfy all obligations of the Organization to you, whether arising pursuant to statute, common law or otherwise, and that you will have no further entitlement to notice, pay in lieu, or severance arising out of your employment or the termination thereof. To be clear, these provisions replace any common law entitlement that you would otherwise have.

[65]        Gibson’s attempts to contract out of the ESA in the termination provisions cannot be saved by this paragraph: see Perretta at para. 58. This paragraph cannot reconcile the parts of the termination provisions that are and have been in direct conflict with the ESA from the outset. See Rossman at paras. 35, 40-41. The statement at the beginning of the paragraph that the intention of the termination provisions is to include any entitlement that the employee has pursuant to the ESA is contradicted by clear violations of the ESA in the termination provisions. Such language creates ambiguity and confusion for an employee and does not constitute clear wording that allows an employee to know at the beginning of their employment what their entitlement will be at the end of their employment. In my view, the termination provisions in the Employment Agreement were not drafted with strict compliance with the ESA as their main objective. See Waksdale at para. 7.

[53]           A severability clause in an employment agreement does not have any effect on clauses of the agreement that have been made void by statute, and cannot be used to rewrite, read down or interpret the terms of the agreement so as to provide for the minimum standard imposed by the ESA.  See Waksdale at para. 14 and North v. Metaswitch Networks Corporation, 2017 ONCA 790 at para. 44. 

[54]        Further, “saving provisions” in termination clauses cannot save employers who attempt to contract out of the ESA’s minimum standards, and cannot reconcile a provision that is in direct conflict with the ESA from the outset. Holding otherwise creates the risk that employers will slip sentences into employment contracts in the hope that employees will accept the terms. This outcome exploits vulnerable employees who hold unequal bargaining power in contract negotiations. Moreover, it flouts the purpose of the ESA – to protect employees and to ensure that employers treat them fairly upon termination. Employers cannot be permitted to draft provisions that capitalize on the fact that many employees are unaware of their legal rights and will often refrain from challenging notice provisions in court. Attempting to reconcile the provisions of a termination clause with the benefit of hindsight runs counter to the remedial purpose of the ESA. See Rossman at paras. 35, 40-41.

My Comments :

This case definitively determines that neither savings clauses or severability clauses can fix an otherwise illegal termination provision.

Therefore a termination clause will only be enforceable if on its face, there is no violation of the ESA.

If you would like a copy of this case, email me at barry@barryfisher.ca

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a)            Celgar recruited Mr. Ferweda. Mr. Ferweda was not actively looking for a different job, nor did he respond to a newspaper advertisement. Rather, he responded to an email sent directly to him by a recruiter retained by the employer;

b)            Celgar attempted to make the job attractive to Mr. Ferweda during the visit to the Celgar Mill, which was paid for by the Celgar;

c)            During the Celgar Mill visit, Mr. Percy, who had previously worked for Catalyst, made statements which pointed out the aspects of employment with Celgar that were superior to Catalyst, including paid overtime, better benefits and a stable fibre supply;

d)            Mr. Percy expressly told Mr. Ferweda that Celgar hired for the “long term”;

e)            Mr. Belland specifically asked Mr. Ferweda how long he was prepared to commit to Celgar for, implying that the position was meant to be comparatively long-term; and

f)            Mr. Ferweda did not accept the first offer, but only took the job after Celgar offered an increased salary.

In Marshall v. Mercantile Exchange Corporation (2024 CanLII 71128 (ON SC)

https://canlii.ca/t/k62r7, Justice  Koehnen has a situation where the Plaintiff was claiming 26 months notice but plead that they were unable to look for another job because of their medical condition.

The Defendant moved under 105 (2) of the Courts of Justice Act provides:

“Where the physical or mental condition of a party to a proceeding is in question, the court, on motion, may order the party to undergo a physical or mental examination by one or more health practitioners.”

In allowing the motion the Judge said :

11]        The mental condition of the plaintiff has been put into question in this proceeding by the plaintiff’s own choice. The degree to which is mental condition has been put into question goes well beyond the usual adjustment period that courts afford plaintiffs to overcome the shock of dismissal before being obliged to mitigate their damages. At the moment, the plaintiff takes the position that he has had no obligation to mitigate for 9 months and that his inability to mitigate will continue into the indefinite future including up to the full 26 months notice he claims. This position arises in the context of relatively high employment and in the context of an income level which is not particularly high, and for which one might expect a significant number of jobs to exist.

[15]        It strikes me that in the circumstances of this case, if the plaintiff takes the position that he is unable to mitigate after 12 months have passed, he should be required to submit to an independent medical examination. That strikes me as a fair balance between giving an employer the right to test allegations of inability to mitigate without allowing employers to abuse independent medical examinations as a tactic to dissuade plaintiffs from legitimately relying on medical issues that prevent them from mitigating damages.

[16]        None of that is to say that the plaintiff is not suffering from a condition that prevents him from mitigating. It is merely to say that if someone takes a position as unusual as the plaintiff is taking, they should be prepared to subject themselves to an independent medical examination in order to test the assertions they are making.

My Commentary:

This use of the IME by Defendants is routine in personal injury cases but is rarely used in employment cases. I have also seen this procedure used where the plaintiff has claimed damages for mental distress.

For a copy of this case email me at barry@barryfisher.ca

To book a mediation, go to my calendar at www.barryfisher.ca

To access the Wrongful Dismissal Database, go to www.wddonline.ca