In the recent Bertsch v. Datastealth Inc. decision, the Ontario Court of Appeal upheld a termination provision in an employment agreement that limited an employee’s rights to only the minimum standards required under the Ontario Employment Standards Act, 2000 (the “ESA”). The court found that the termination provision was clear and unambiguous, and when reasonably interpreted, did not depart from the minimum standards guaranteed by the ESA. This comes as a relief to employers and employer-side counsel in Ontario, as the Court in recent years has come out many cases striking out termination clauses in novel ways.
The termination provision in Bertsch read as follows:
“Termination of Employment by the Company: If your employment is terminated with or without cause, you will be provided with only the minimum payments and entitlements, if any, owed to you under the Ontario Employment Standards Act, 2000 and its Regulations, as may be amended from time to time (the ‘ESA’), including but not limited to outstanding wages, vacation pay, and any minimum entitlement to notice of termination (or termination pay), severance pay (if applicable) and benefit continuation. You understand and agree that, in accordance with the ESA, there are circumstances in which you would have no entitlement to notice of termination, termination pay, severance pay or benefit continuation.
“You understand and agree that compliance with the minimum requirements of the ESA satisfies any common law or contractual entitlement you may have to notice of termination of your employment, or pay in lieu thereof. You further understand and agree that this provision shall apply to you throughout your employment with the Company, regardless of its duration or any changes to your position or compensation.”
The employee claimed that he was entitled to common law damages for wrongful dismissal, which are often much higher than ESA minimums. On appeal, he argued that an ordinary person could incorrectly interpret the provision to mean that an employee could be dismissed without notice for conduct that did not meet the ESA’s high threshold for termination without notice. That threshold requires an employee to be “guilty of wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer” to be disentitled to statutory notice and severance due to their own misconduct.
The Court of Appeal rejected the employee’s arguments, reasoning that a finding of ambiguity requires more than the mere existence of competing interpretations and that this was not a situation where the wording of the provision might be confusing to a layperson. The Court upheld the lower court’s decision that the termination provision was unambiguous and not contrary to the ESA. As such, the Court dismissed the employee’s claim for common law damages for wrongful dismissal.
Bertsch is a favourable decision for Ontario employers. It confirms that courts will enforce well-drafted termination provisions that limit an employee’s rights to ESA minimums, so long as the language is clear, unambiguous and compliant with the ESA. That said, the decision is also a reminder of the importance of careful drafting. Courts will closely scrutinize the language of termination provisions, and any unclear or ambiguous language could render them unenforceable.