Canada: Court Reduces Notice Period, Employee Should Have Known Better

The Ontario Superior Court of Justice recently reduced the notice period awarded to a wrongfully terminated for his failure to properly read his contract before signing on the dotted line. In Miller v. A.B.M. Canada Inc., the plaintiff’s job involved staying abreast of legislation, and he had previous experience in human relations. As such, the court found that he had some responsibility for ensuring the agreement was valid prior to signing, which it was not, and reduced the notice awarded.

The plaintiff, Miller, was employed as the Director, Finance and Business Process Improvement of the defendant corporation for 17 months when he was terminated without cause. The contract stipulated an entitlement to the minimum notice amount prescribed by the applicable legislation, in this case the Employment Standards Act, 2000, but made no mention of benefits. The plaintiff rejected the notice offered on and brought an action for wrongful , seeking a greater notice period as well as the payment of benefits during that period.

Justice Glithero referred to the principle enunciated in Machtinger v. Hoj Industries Ltd. that

…a contract of employment for an indefinite period target=_blankrequires that the employee be given of an intention to terminate the contract if dismissed without cause…this principle is characterized as a presumption, rebutted only if the contract clearly specifies some other period of notice, either expressly or impliedly, and such other period is not inconsistent with legislated minimums.

Where a termination clause calls for pay in lieu of notice, but does not provide for the payment of benefits during the notice period, the entire clause is void as contrary to the Employment Standards Act, 2000. As the court stated, if a term makes the contract unlawful, then no lawful contractual term can be extracted such as to preserve or save the length of the notice period where the entitlement to benefits during the notice period is contrary to the statute. In the contract at hand, the pension contribution and car allowance benefits were not included in the amounts to be paid during the period of notice. As such, the termination clause as a whole was void, and notice was to be determined on the basis of common law principles.

Interestingly, when determining the proper notice period, the judge took into account the plaintiff’s failure to properly read and understand the employment contract. At trial, the plaintiff testified that when he reviewed his original employment contract, he saw the heading marked Termination, knew what it meant, but chose to ignore the terms set out thereunder. He also agreed, in his testimony, that he would never recommend to one of his own clients of his new business that they sign a contract without reading it, and would in fact advise them to seek legal advice before signing anything. While Glithero J. did not enumerate how much he reduced the notice period in recognition of the plaintiff`s negligent reading, he stated:

I also take into account Mr. Miller`s evidence that he did not read the termination provisions in the contract…Had he done so, he could have voiced objection to whatever provisions he found unsatisfactory, either as to length of the notice period, or the fact that it did not call for payment of benefits during that period…In the circumstances of this case, the employee cannot escape bearing some responsibility for the fact that both parties entered into a contract which fell below ESA standards.

In the result, the plaintiff was awarded 3 months pay in lieu of notice, as well as benefits for that same period, an amount on the low end of the spectrum awarded to plaintiffs in similar cases. It remains to be seen whether future cases will pick up Glithero J.’s admonition of an employee’s failure to properly review their contract in future termination cases.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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