Case In Point
Ontario Court of Appeal Upholds Waksdale – Overturns Superior Court Decision That Attempted to Distinguish It
Date: June 9, 2022
On June 8, 2022, in Rahman v. Cannon Design Architecture Inc., the Court of Appeal reiterated that Waksdale is supreme in Ontario.
The Decision Below
In September 2021, a judge of the Superior Court determined on the facts of the case before him that a contractual provision in an employment agreement which denied entitlements upon termination for just cause did not amount to an attempt to contract out of the Employment Standards Act, 2000 (ESA) because, among other things, the employer and employee had equal bargaining power in negotiating the employment agreement in question and shared a mutual intention not to contract out of the ESA. For this, and other reasons, the Court found the termination provision to be valid and enforceable.
For a fulsome review of the Superior Court’s decision, see our summary here.
At the Court of Appeal
The Court of Appeal found that the plain wording of the termination provision ran afoul of the ESA and was therefore void and unenforceable, ruling that the judge below erred at law in considering the former employee’s “sophistication and access to independent legal advice” and using those factors, among others, to “override the plain language” in the termination provisions.
As the Court stated:
[30] This court has repeatedly held that if a termination provision in an employment contract violates the ESA – such as a “no notice if just cause” provision – all the termination provisions in the contract are invalid. See, for example, Waksdale v. Swegon North America Inc., 2020 ONCA 391, 446 D.L.R. (4th) 725, at para. 10, leave to appeal refused, [2020] S.C.C.A. No. 292; Rossman v. Canadian Solar Inc., 2019 ONCA 992, 444 D.L.R. (4th) 131, at para. 18. In Waksdale, as in the present appeal, the employer had not purported to terminate the employee for just cause. However, the just cause provision in the employment contract violated the ESA. The invalidity of the just cause provision rendered the other termination provisions unenforceable: Waksdale, at para. 10.
[31] Accordingly, the termination provisions in the [employment agreement is] void and cannot be relied upon by the Respondents.
The Court of Appeal’s decision illustrates the importance of having clear and enforceable termination provisions in an employment agreement and reaffirms that termination provisions will be read together, in their plain wording, in assessing their validity and enforceability.
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