In Ontario, employers have the right to terminate an employee without cause. This means an employee has done nothing wrong for the employer to decide to let them go. There are a number of reasons a business may want to dismiss an employee without cause, including a looming restructuring, shortage of work, or a change in leadership. While the employer may provide an employee with a reason for their termination without cause ontario, they are not required to do so. Rather, they may end the employment relationship without any explanation.
Minimum termination entitlements
The plaintiff was fired without cause and did not receive the minimum termination entitlements required by Ontario employment standards legislation. After his dismissal, Mr. Sewell filed a wrongful dismissal suit against the company, seeking damages for two weeks of salary and benefits. The plaintiff also brought a summary judgment motion seeking damages for lost wages and benefits during the common law notice period.
The Ontario Superior Court of Justice recently ruled that a termination clause in an employment contract is unenforceable. This ruling has implications for employment lawyer toronto who terminate workers without cause. In Sewell, the plaintiff received an annual salary of $126,200 plus a discretionary bonus of $2,000, which he was not entitled to. As such, the employer’s termination clause was invalidated. The court agreed with the plaintiff and ordered that the employer must pay him his two weeks’ salary and benefits as a compensation.
Avoid the pitfalls
Despite the dissent in the Waksdale case, Ontario’s Court of Appeal has now made the decision in the employee’s favor, clarifying the grounds for an increased notice. In fact, this decision has paved the way for an enforceable clause in employment contracts, which will help employers avoid the pitfalls of termination without cause. However, the decision will likely be applied inconsistently throughout the province.
While the majority of the judges in Waksdale agreed that the with cause provision was invalid under the Employment Standards Act, the court held that the with cause provision was also void because it did not account for the “wilful misconduct” standard in statutory terminations. In addition, Waksdale argued that an invalid with cause provision rendered his entire employment agreement void. However, Swegon’s position was that the case was not about the severability of the clause, but rather whether he was terminated without cause.
A Principal with a $185,000 base salary and 75% deferred stock units in her last year of employment. Her offer letter also contained a provision requiring her to sign the Officer’s Agreement if she was hired. Ultimately, she rejected the offer. However, the court held that the offer letter was not rescinded simply because the plaintiff had not performed as required.
Termination with cause provision
The Ontario Court of Appeal recently addressed the validity of a termination without cause provision and whether it invalidated a contract. In this case, a plaintiff had worked for a company that required him to sign a contract containing a normal termination without cause provision and a termination with cause provision. While he was terminated for no reason, he was paid only under the termination without cause provision.
The Court of Appeal of Ontario followed a decision from the Waksdale case to determine whether a termination without notice was lawful. It decided that the employer did not meet the willful misconduct standard, but relied on a clause in an employment agreement to dismiss the employee. Interestingly, in both cases, the employer had to pay the employee at least two weeks’ salary and benefits, unless the employee was able to prove that the reason was unreasonable.
Just cause clauses in employment contracts in Ontario are not always enforced. In an Ontario Court of Appeal decision in Waksdale v. Swegon North America Inc., the court found that an employment contract’s just cause language was inconsistent with the Employment Standards Act, allowing a former employee to be terminated without notice in certain circumstances. As such, this ruling has caused many employers to rewrite their employment contracts to avoid being held liable for wrongful termination.
A recent court case has interpreted the Employment Standards Act (ESA) as prohibiting termination without “just cause” in certain situations. While the ESA does not define the term “just cause,” common law principles apply in these cases. The decision in Waksdale v. Swegon North America Inc. has made just cause clauses in employment contracts in Ontario invalid. Nonetheless, employers should take caution when drafting their contracts and check to ensure that they do not contain “for cause” clauses.