Last year, the Ontario Court of Appeal created quite a stir with its decision in Waksdale v. Swegon North America Inc., 2020 ONCA 391 (the “Waksdale decision”). In that decision, the Court found that although drafted properly, a termination without cause provision in an employment contract was unenforceable because the termination with cause provision in the same contract provided for termination without notice in circumstances broader than those contemplated by the Employment Standards Act, 2000 (the “ESA”). Following the Court of Appeal’s decision, employers across the province scrambled to amend their termination provisions to ensure their enforceability as plaintiffs began to raise the “Waksdale argument” in wrongful dismissal claims.
Recently, Justice Dunphy of the Ontario Superior Court of Justice issued a decision which appears to specifically address the absurdity of the effect of the Waksdale decision. In Rahman v. Cannon Design Architecture Inc., 2021 ONSC 5961 (the “Rahman decision”), the Plaintiff’s employment was terminated without cause after four years of employment. The Plaintiff argued that the termination without cause provision in her employment contract was unenforceable, because the termination with cause provision permitted termination without notice in circumstances broader than those contemplated by the ESA. The termination with cause provision in Ms. Rahman’s contract provided as follows:
Please log in to read the full article.