Case In Point
Court Invalidates ESA-Only Termination Clause, Again
Date: April 24, 2018
In King v DST Systems, the Ontario Superior Court again struck down an Employment Standard Act, 2000 (ESA)-only termination clause – this time for not mentioning benefits.
The plaintiff was 50 years old at the time his employment was terminated. He held the title of Vice President, Head of Operations in Canada for approximately 22 months and earned a base salary of $212,400 per annum.
The clause in question stated that the employer could terminate employment without cause by providing the plaintiff “with such notice (or pay in lieu thereof) and severance pay as may be prescribed by the ESA (or such other applicable legislation as may then be enforced)” and have “no further or other entitlements in that regard.”
The Court stated that the ESA-only termination clause referred to “pay” but did not refer to benefits. It agreed with the plaintiff that “a failure to specify all types of remuneration available as part of severance due and owing is contrary” to the reasoning in Wood v Fred Deeley Imports Ltd and awarded four months’ notice.
The Court went on to state that it was “reinforced in this understanding by the defendant’s acknowledgment they did not provide for all the types of remuneration it was providing to the plaintiff as part of the payment of the two weeks’ notice.” Contrast this finding with that of Wood where the Court of Appeal stated that in interpreting ESA-only termination clauses, parties are only to look at the wording of the contract, not the actions or inactions of the employer at the time of the discharge.
Nevertheless, King v DST Systems can be added to the growing list of decisions that interpret and apply ESA-only termination clauses, with varying results.
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