The Significant Impact of Waksdale on the Enforceability of Termination Provisions

  • February 11, 2021
  • Behzad Hassibi

In Waksdale v Swegon North America Inc, 2020 ONCA 391, the Ontario Court of Appeal held that if an employment contract’s termination clause contains even a single violation of an employment standard, the entire termination clause is void and inoperable for all purposes. With the Supreme Court of Canada denying leave to appeal on January 14, 2021,[1]this decision will have a significant impact on the enforceability of employment contracts. Many termination clauses that were previously enforceable may now be null and void, which will increase employees’ entitlements upon termination, and hence employers’ liability.

The Facts

The employer terminated the Plaintiff Benjamin Waksdale’s employment on a without cause basis. The employment agreement contained two separate provisions for terminating the employment relationship: (a) Termination with Notice, and (b) Termination for Cause. Mr. Waksdale claimed that the Termination for Cause provision violated the minimum standards of the Employment Standards Act, 2000 (“ESA”), and that he was thus entitled to reasonable notice at common law.

The employer conceded that the Termination for Cause provision was void and unenforceable.[2] However, it argued that since the company had not alleged cause, it could still rely on the Termination with Notice provision. The motion judge agreed, holding that the Termination with Notice provision was stand-alone, unambiguous, and enforceable. Mr. Waksdale appealed the motion judge’s decision.