The Ontario Divisional Court recently affirmed the lower
court's decision in the case of Miller v. A.B.M., an
important case with respect to the interpretation of termination
provisions in employment contracts. Regular readers of this blog
our earlier blog discussion about the lower court's
In Miller, the employee signed an employment agreement
with the following termination clause: "Regular employees may
be terminated at any time without cause upon being given the
minimum period of notice prescribed by applicable legislation, or
by being paid salary in lieu of such notice or as may otherwise be
required by applicable legislation." The termination provision
did not expressly state that benefits would be continued during the
statutory notice period under the Employment Standards Act,
2000 (the "ESA"). As a result, the court found that
the termination provision contravened the ESA. In upholding the
lower court's decision that the termination provision was void
and common law notice should instead be substituted, the Divisional
Court made the following findings.
First, the court stated that the employment agreement in
question distinguished salary, pensions and car allowance under the
heading of 'remuneration', but that the termination
provision specifically just referenced salary. As a result, it was
clear that just salary was to be provided on termination.
Second, the court found that the employment agreement's
silence on providing benefits during the notice period did not lead
to a presumption that benefits would be provided. At best, the
court found that there was an ambiguity in the agreement with
respect to the question of whether benefits would be continued, and
ambiguities should be interpreted against the drafter (in this
case, the employer).
This case confirms the law set out in earlier decisions such as
Wright v. Young and Rubicam Group of Companies and
Stevens v. Sifton Properties Ltd. In short, in order to ensure
that the termination provision in an employment agreement is not
set aside, it must be carefully drafted and it must not appear to
undercut the minimum provisions of the ESA. If the termination
provision does not expressly state that benefits will continue
during the ESA notice period, then the employer risks having the
termination provision set aside.
For employers who have not had the termination provisions in
their employment agreement templates reviewed recently, now would
be a good time to ensure that they are in order and to consider
updating them if they are not.
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Unfortunately, reasonable accommodation for employees in the workplace continues to be the source of significant litigation and even today we continue to see outrageous examples of employers behaving badly.
We are now beginning to see reported cases involving charges and subsequent fines laid against employers for failing to provide information, instruction and supervision to protect a worker from workplace violence.
On October 13, 2016, the Supreme Court of Canada denied leave to appeal an Ontario Court of Appeal decision which ordered an employer to pay a former employee 37 months of salary and benefits following termination.
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