Court Rules Employees Can Opt Out Of Reasonable Notice Under Common Law

Written on behalf of Arbesman Hamilton LLP

The opportunity to sign an employment contract can be an exciting time in one’s professional career. However, employment contracts can be complicated, and, as seen in a recent case from the Ontario Superior Court of Justice, they can sometimes contain clauses limiting an employee’s common law entitlements.

What Happened?

The employee worked for the Employer as a Senior Systems Administrator from June 2010 until his termination in November 2016. During his six and a half years with the employer, he signed five consecutive employment contracts.

Each of the five contracts signed by the employee contained a termination clause intended to displace the employee’s right to common law notice in the event of termination of employment.

The clause in question stated

At any time, following the conclusion of the Probationary Period, the Employer may terminate the Employee without just cause simply upon providing him/her with the entitlements prescribed in the Employment Standards Act, 2000 (“the Act”) or any amendments thereto. The Employee hereby acknowledges that he/she has had the opportunity to review the relevant portions of the Act and/or to consult with legal counsel about their impact on his/her current entitlements upon termination of his/her employment.

Common Law Notice

Common law notice, developed over time by the courts, allows for notice greater than what is required under the provincial Employment Standards Act. While the amount of notice available under common law varies from case to case, factors such as age, the position of the employee, the length of service, the employee’s salary, and the availability of new employment for the employee are all factors that can be considered.

While the amount of notice available under common law varies from case to case, factors such as age, the position of the employee, the length of service, the employee’s salary, and the availability of new employment for the employee are all factors that can be considered.

When the employee was terminated he was offered 6 weeks’ termination pay and 6.42 weeks of severance pay, plus an additional week’s pay in consideration for accepting the offer, the latter of which was in addition to the ESA’s guidelines. The employee refused to accept the offer, and brought an application for damages for wrongful dismissal.

The Positions of the Parties 

The employee argued that the contract was not enforceable because the phrase “with the entitlements prescribed in the Employment Standards Act, 2000” found in the termination clause was ambiguous, thus entitling him to common law notice.

The employer argued the clause constituted a valid and enforceable waiver of the employee’s right to reasonable notice at common law, limiting the employee to the statutory entitlements prescribed under the Employment Standards Act.

The court ruled in favour of the employee:

With respect to the impugned agreement, this Court finds that the terms of the Termination Clause are not ambiguous and sufficiently rebut the common-law presumption of termination only upon reasonable notice, effectively limiting the notice requirements to those as set out in the ESA.

What this means is that employees and employers can agree to opt out of reasonable notice found in common law and instead rely strictly on what is written in the Employment Standards Act. However, the agreement to do so must be written in very clear language in the contract.

The lawyers at Arbesman Hamilton LLP represent both employers and employees in employment law matters. We can work with employers in drafting contracts that are clear and unambiguous, providing a proactive approach to their legal needs. We work with employees to help them understand their legal rights and can interpret a contract in order to determine whether employment rights have been broken. Contact us online or by phone at 416-481-5604 to book a consultation today.