Changes to Legislation have Far-Reaching Implications on Employment Contracts
By Melynda Layton LLB
As Published in November 2004 Issue of Up-Date OHRPA Newsletter
Termination clauses are receiving increased scrutiny by employers, lawyers, and judges alike. In 2000 the addition of the words “at least” to subsection 57 of the Employment Standards Act, 2000 revolutionized this area of law.
Pre-2000 the legislation provided for an employees’ right to notice upon termination setting maximum entitlements upon termination of employment as follows:
57. (1) no employer shall terminate the employment of an employee who has been employed for three months or more unless the employer gives,
one weeks notice in writing to the employee if his or her period of employment is less than one year;
two weeks notice in writing to the employee if his or her period of employment is one year or more but less than three years….
In its current incarnation, subsection 57 indicates;
57. The notice of termination under section 54 shall be given,
at least one week before the termination, if the employee’s period of employment is less than one year;
at least two weeks before the termination, if the employee’s period of employment is one year or more and fewer than three years….
The insertion of the words “at least” has altered the landscape of employment standards. Statutes using the terminology “at least” do not preclude payment of reasonable notice. On the contrary Courts have indicated the term “at least” only sets a minimum right to notice but does not oust the common law. This was confirmed in McLennan v. Apollo Forest Products Ltd. (1993), 49 C.C.E.L. 172 (B.C.S.C.), where the Supreme Court of British Columbia found a termination clause referring to its employment standards legislation did not exclude entitlement to reasonable notice because of the inclusion of the words “at least” in the notice section.
In 1999 Justice Abella of the Ontario Court of Appeal addressed clauses restricting notice entitlements upon termination of employment in MacDonald v. ADGA Systems International Ltd. MacDonald was an engineer who spent 35 years with the Canadian Air Force where he reached the rank of Lieutenant Colonel. He was recruited by ADGA upon his retirement in 1988. ADGA provided professional consulting services to the federal government. MacDonald was terminated in June 1994 when ADGA failed to win a contract to service CF-18 fighters.
At the inception of employment MacDonald signed a contract indicating if he was terminated he would receive “not less then one month’s prior notice”. The termination clause of that contract indicated:
The Company may terminate this Agreement without notice at any time by reason of the Employee’s dissipations, violation of any instruction or rule of the Company, or failure to comply with any of the agreements on the part of the Employee as herein set out. In addition it is also agreed that either party to this Agreement may terminate this Agreement at any time by giving not less than one (1) months prior written notice sent either by registered mail or bailiff.
The employer terminated MacDonald providing him with six weeks compensation as required by statute as well as an additional seven weeks. The trial court found MacDonald was entitled to fourteen months as the contract was not enforceable because it breached the employee’s right to the legislated minimums. On appeal the Court found the clause did not contravene the Employment Standards Act’s minimum requirement. On the contrary, the contract required ADGA to pay one month notice in addition to the legislated minimums thereby rebutting the presumption of reasonable notice of termination. Given, the contract did not preclude payment of the legislated minimums MacDonald was only entitled to one months’ notice over and above his statutory entitlement.
Since MacDonald was decided the Employment Standards Act was overhauled thereby suggesting a Court would now come to a very different conclusion when faced with a similar contractual term.
The changes to the Employment Standards Act, 2000 have far-reaching implications. General reference within a contract to entitlement upon termination, “inconformity with the Employment Standards Act” will not be sufficient to rebut the presumption of reasonable notice since the words “at least” are not sufficient to displace the common law.
In order to minimize liability upon termination of employment an employment contact must explicitly state the employer will only be entitled to the number of weeks indicated in the legislation. A clearly worded employment contract will minimize the risk of increased liability as a consequence of the change to the legislation.
To ask a question or for further advice please contact Melynda at email@example.com or by telephone at 613-225-4400