All Good Things Come to an End: Court of Appeal Overturns Rahman Decision that Distinguished Waksdale

  • June 15, 2022
  • Natalie Garvin

Bottom Line 

In September 2021, the Superior Court of Justice in Rahman v Cannon Design Architecture Inc. (“Rahman”) upheld the “just cause” termination provision in an employment contract. This decision provided employers with hope that courts may shift from the rigid and strict interpretation of employment contracts that has arisen since the Court of Appeal’s decision in Waksdale v Swegon North America Inc. (“Waksdale”). 

However, the Court of Appeal for Ontario (“ONCA”) has now overturned the Superior Court of Justice’s decision in Rahman, finding that the “just cause” provision in the employment contract contravened the Employment Standards Act, 2000 (the “ESA”). The provision permitted the employer to terminate employment without providing notice or pay in lieu in circumstances broader than the statutory standards of “willful misconduct, disobedience, or willful neglect of duty.” 

For more information on the Court’s approach in analyzing employment termination provisions since Waksdale, see our summaries of the decisions in Rahman, Perretta v Rand A Technology Corporation, Livshin v The Clinic Network Canada Inc., and Campbell-Givons v Humber River Hospital. 

Factual Background 

The plaintiff, Farah Rahman, was employed by Cannon Design Architecture Inc. (“CDAI”) as a Senior Architect Principal and Office Practice Leader. After being employed for four years, she was dismissed from employment and provided with four weeks of her base salary, in accordance with her contractual and statutory entitlements. 

Rahman sued for wrongful dismissal and, on a summary judgment motion, asked the Court to determine: (1) whether the termination provision in her employment contract was enforceable; and (2) that the three defendants — CDAI, Cannon Design Ltd., and The Cannon Corporation — were her common employers. 

The plaintiff’s main challenge to the termination provision in her employment contract was that the just cause provision permitted termination without notice in circumstances beyond those permitted by the ESA, contrary to the Court’s decision in Waksdale. 

Ultimately, the Superior Court of Justice found the termination provision in the parties’ employment contract was enforceable. The motion judge also held that Rahman was employed by only CDAI. Rahman appealed the Superior Court of Justice’s decision.