There are two recent court decisions which have a significant impact on termination of employment in Ontario.
The first case, Waksdave v. Swegon North America, 2020 ONCA 391, strikes down the “no pay for Just Cause” clause in an employment agreement. Essentially, if your agreements have this clause, your entire termination clause/section could be ruled void if you are sued for Wrongful Dismissal. It does not matter if there is a “severability” clause, as the court ruled that these clauses violate a person’s rights. At the heart of the case is the fact that the Employment Standards Act definition of “Just Cause” is very high, and most times, employers do not meet that threshold when using “Just Cause” as the reason. It is best to offer the minimum ESA payment for a Just Cause, and use “common law” precedents for the “without cause” dismissals.
The second case, Iriotakis v. Peninsula Employment Services Limited, 2021 ONSC 998, centers around a termination at the start of the pandemic. The person was offered 2 months pay, they felt this was not enough, arguing the COVID pandemic was impacting the job market, and asked for 6 months pay. The court agreed that a “reasonable approach is needed” because “this [COVID] influence is imprecise, highly speculative and uncertain both to the degree and duration at the time” of termination. However, the court did not agree entirely with the complainant, and granted three months termination pay. It is important to note the court also took into consideration that the person obtained CERB payments after their dismissal.
The takeaways from these cases are that Employment agreements will need to be modified as soon as possible to ensure your termination clauses comply, and if possible, be a little more generous when terminating employment.
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