Employer Alert: Does your employment contract meet the minimum standards of the Employment Standards Act?

Employer Alert: Does your employment contract meet the minimum standards of the Employment Standards Act?


Robert J. Lesperance, Partner
Phone: 604-685-8737
Email: RJL@LMLAW.CA

Wood v. Fred Deeley Imports Ltd. 2017 ONCA 158

Employers should always ensure that they enter into written employment contracts with their employees. One of the key reasons is the ability limit reasonable notice or severance upon termination to the minimum requirements under the Employment Standards legislation enforced in each of the Canadian Provinces and Territories.

If any employer adopts the minimum reasonable notice required to terminate the employment of an employee, the employer does not have to provide the employee with common law reasonable notice. However, the employment agreement must strictly comply with the minimum severance obligations under the employment standards legislation where the employee resides.

A recent court case from the Ontario Court of Appeal in Wood v. Fred Deeley Imports Ltd. 2017 ONCA 158 illustrates the requirement for precision in drafting these termination provisions. Under the Ontario Employment Standards Act, (the “Act”), if an employee is terminated, an employer must continue its contributions to an employee’s benefits during the minimum statutory notice period. In the plaintiff’s case, it was the employer’s contributions to the plaintiff’s health and dental plan and her RRSP. The termination provision in the plaintiff’s employment contract did not provide that benefits would continue during the notice period and the court said the termination provision failed to comply with the minimum requirements under the Act and held the provision unenforceable.

In general, the courts interpret employment agreements differently than other commercial agreements because work is one of the most fundamental aspects in a person’s life, providing a means of financial support and contribution to society as a whole. Failure to properly draft a termination provision in an employment contract will render it unenforceable and the employer will be required to give the employee common law notice. This notice can be significantly higher than employment standards notice. In the Wood case noted above, the employer ended up having to pay $62,000, the equivalent of nine months’ salary, as common law notice to the employee, instead of $13,800, or eight weeks’ notice which was the minimum notice under the Act. This lump sum amount was in addition to the award of court costs of approximately $40,000.00 and the inconvenience and stress on management of having to deal with the litigation in the courts.

Therefore, employers should have their employment agreements reviewed periodically to ensure these agreements comply with the minimum requirements under employment standards legislation.

WHAT WE DO: Lesperance Mendes has been advising and representing employees and employers in all matters related to employment law, including contract drafting and reviews, terminations, settlements and litigation. To find out more about how you can benefit from our advice and expertise contact Bob Lesperance at 604-685-8737 or RJL@LMLAW.CA or Naomi Rozenberg at 604-685-3911 or NRR@LMLAW.CA

THIS ARTICLE IS NOT LEGAL ADVICE: This article provides general information and should not be relied on without independent legal advice.