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Posts tagged: Termination Clause

Reviewing a Severance Package: What to Expect from an Employment Lawyer

By , March 7, 2018 12:26 pm

You have just been terminated. You have been given a week or so to accept a severance package but you don’t know if it is fair. That is where we come in.

We Tell You Whether Your Termination Package is Fair

We only do employment law and we review 100s of severance packages each year.

Before telling you whether we think your termination package is fair we will speak with you for about an hour to find out about the background to your termination so we can provide you with an informed opinion.

What Happens When You Meet with Us?

We ask you a lot of questions.

If you have been terminated without just cause then we will want to know all of the information a judge would take into account when deciding how much termination pay you are owed. If you were terminated with cause we need to discuss the alleged misconduct to assess whether the employer would likely prove just cause.

If you have signed an employment contract with a termination clause we will want to discuss the circumstances surrounding the contract. Recently judges have refused to enforce some termination clauses so we carefully review the termination clause to assess whether it is legally enforceable.

You Don’t Know What You Don’t Know

You may have additional legal claims against your former employer that you did not even consider. We understand you are not an employment lawyer and you don’t know what information is important. We do.

For example, your former employer may owe you more money as of your last day of employment than you thought possible.

Or you may be owed more money because the employer discriminated against you. Did you know that there are 16 personal characteristics that an employer cannot take into account when terminating your employment? Like your age, your gender or the fact you have a disability or a perceived disability.

If an employer treats you poorly during your employment, at the time of your termination, or after your termination then you may be entitled to additional compensation.

We Provide Peace of Mind

At the end of your consultation, we will tell you whether your severance package is fair and if not what we think would be fair. Some people find that going through this process gives them peace of mind and helps them move on with their lives.

For over 30 years, Doug MacLeod of the MacLeod Law Firm has been advising emploeers on all aspects of the employment relationship. If you have any questions, you can contact him directly at 416 317-9894 or at [email protected]

The material and information in this blog and this website are for general information only. They should not be relied on as legal advice or opinion. The authors make no claims, promises, or guarantees about the accuracy, completeness, or adequacy of any information referred to in this blog or its links. No person should act or refrain from acting in reliance on any information found on this website or blog. Readers should obtain appropriate professional advice from a lawyer duly licensed in the relevant jurisdiction. These materials do not create a lawyer-client relationship between you and any of the authors or the MacLeod Law Firm.

Lessons about Termination Clauses

By , February 14, 2018 1:29 pm

As we have written before, termination clauses may have a significant effect on how much money you receive if you are terminated.

Many termination clauses attempt to limit the termination and severance pay an employee will receive. Throughout 2017, we saw several decisions from Ontario judges which decided termination clauses were not enforceable. In these cases, the courts often ordered the employer to pay more to the employee because the termination clause was poorly drafted.

In a recent decision, the Ontario Court of Appeal, went the other way. The Appeal Court upheld a termination clause finding that is was enforceable.

The Case: Nemeth v. Hatch Ltd., 2018 ONCA 7

In this case, Nemeth was employed by Hatch for 19 years.  When his employment was terminated, Hatch provided only the bare minimum payments under the Employment Standards Act (ESA): 8 weeks’ notice of termination and 19.42 weeks’ severance pay.

Nemeth’s contract included a termination clause stating that: “…employment may be terminated by either party with notice in writing. The notice period shall amount to one week per year of service with a minimum of four weeks or the notice required by the applicable labour legislation.”

Based on previous court decisions, this clause appeared to be missing important elements.  It did not include statements about the ESA requirements of severance pay and benefit continuation. It also did not say that Nemeth gave up his rights at common law.

Likely because of this, Nemeth brought a wrongful dismissal action which went up to the Court of Appeal. The Court held that the termination clause did not need to have specific language removing the employee’s common law rights.  The Court found that the “intention to displace an employee’s common law notice rights” was evident from the contract. It also held that while the termination clause did not mention severance pay or benefit continuation that did not make the clause unenforceable.

Lessons for Employees

This clause was surprising to many employment lawyers and was a different approach than the Court of Appeal and other courts in Ontario took throughout 2017. The case highlights how important it is for employees to have their employment contracts reviewed by a lawyer.  Employees should not wait until after termination to try and fight about their contract.  Making sure that you understand the terms and conditions of your employment contract or offer letter and negotiating to improve the language can have significant financial benefits at a later date.

If you have been given an employment contract to sign, or have recently been terminated, you should consult a lawyer.  You can contact us at [email protected] or 647-204-8107 and one of our lawyers would be happy to assist you.

“The material and information in this blog and this website are for general information only. They should not be relied on as legal advice or opinion. The authors make no claims, promises, or guarantees about the accuracy, completeness, or adequacy of any information referred to in this blog or its links. No person should act or refrain from acting in reliance on any information found on this website or blog. Readers should obtain appropriate professional advice from a lawyer duly licensed in the relevant jurisdiction. These materials do not create a lawyer-client relationship between you and any of the authors or the MacLeod Law Firm.”

Independent Contractor Owed Notice of Termination

By , November 1, 2017 10:01 am

One common misconception is that, unlike employees, independent contractors are not owed notice of termination. In one recent case from Ontario, an employer was forced to pay an independent contractor for notice because of the way the termination clause was drafted in the contract. Although the facts of this case are somewhat unique, there are still important takeaway points for independent contractors to keep in mind, which I will discuss below.

Mohamed v Information Systems Architects Inc.

Facts

Mr. Mohamed was hired as an independent contractor for Information Systems Architects Inc. (ISA) to provide technological services for their client, Canadian Tire for a 2 month project. Prior to being hired, on November 1, 2015, Mr. Mohamed consented to a security check and disclosed that he had been convicted for assault with a weapon in 2000 on the consent form. The next day, Mr. Mohamed signed a consulting agreement which included the following termination clause:

This Agreement and its Term shall terminate upon the earlier occurrence of:

I. ISA, at their sole discretion, determines the Consultant’s work quality to be sub-standard.

II. ISA’s project with Customer gets cancelled, experiences reduced or altered scope and/or timeline.

III. ISA determines that it is in ISA’s best interest to replace the Consultant for any reason.

IV. Immediately, upon written notice from ISA, for any breach of this Agreement by the Consultant.

On November 4, 2015, Mr. Mohamed sent ISA a security disclosure form in which he once again disclosed his criminal record. The next day, he began to perform computer security services for Canadian Tire on site.

Around this time, Canadian Tire retained ISA for a second project which required a security engineer to temporarily fill a position for six months. ISA offered to project to Mr. Mohamed, which he accepted by signing a second consulting agreement.

On December 4, 2015, ISA received the security report for Mr. Mohamed, which indicated his conviction. The report was forwarded to Canadian Tire, which asked ISA to replace Mr. Mohamed. Mr. Mohamed was advised that he was being terminated by Canadian Tire and had to leave the premises. Mr. Mohamed sent an email to ISA detailing the steps he had taken to obtain a pardon for his conviction. ISA terminated Mr. Mohamed, relying on the termination clauses found in the consulting agreement.

Decision

The court found that the termination clauses were vague and unclear, and therefore, unenforceable. The termination clauses gave ISA the unfettered right to terminate Mr. Mohamed’s contract. The judge found this to be inconsistent with the doctrine of good faith in the performance of contracts. The judge also commented on how the clauses made no sense in operation as they provided for notice if Mr. Mohamed breached the agreement (without specifying the amount of notice), and yet no notice was required if Mr. Mohamed’s work quality was sub-standard (which is a breach of contract). The judge found it to be illogical for the termination clause to require notice where he breaches the contract, but no notice if he had done nothing wrong.

The court moved on to note that nothing turned on whether Mr. Mohamed was an independent or dependent contractor: as the contract was for a fixed term, Mr. Mohamed was entitled to the balance of contract owing, with no obligation to mitigate his damages. Therefore, Mr. Mohamed was entitled to 5 months and 3 weeks of the contract. In my next blog, I will delve more into how the judge arrived at this decision.

Lessons to be Learned

  1. Although independent contractors don’t enjoy protections under the Employment Standards Act, notice of termination may still be required. If you were characterised as an independent contractor and were terminated without notice, it is still advisable to speak to an employment lawyer to ensure you are not owed notice of termination.
  2. The way damages are calculated for breach of an indefinite contract versus a fixed term contract is very different. I will be exploring this concept further in my next blog.
  3. As an interesting side note, a private member’s bill has recently been introduced which, if passed into law, would extend protections under the Human Rights Code to people with police records (currently, Mr. Mohamed would only enjoy protection under the Code if he had obtained a pardon for his conviction). To read more about my thoughts on this proposed addition to the Code, click here.

“The material and information in this post are for general information only. They should not be relied on as legal advice or opinion. The author makes no claims, promises, or guarantees about the accuracy, completeness, or adequacy of any information referred to in this post or its links. No person should act or refrain from acting in reliance on any information found in this post. Readers should obtain appropriate professional advice from a lawyer duly licensed in the relevant jurisdiction. These materials do not create a lawyer-client relationship between you and the author or the MacLeod Law Firm.”

Another Termination Clause Bites the Dust

By , April 19, 2017 9:13 am

You may have signed an offer of employment or an employment contract before you started it work. If so, it could have a termination clause.

Many termination clauses attempt to limit how much termination pay an employee will receive. As we have written before, if the termination clause is poorly drafted, the judge will not enforce it and order the employer to pay more termination pay..

In a recent decision, the trial judge ordered an employer to pay an employee 15 termination months instead of the 8 weeks that was set out in the employment contract he signed.

The Case: Vinette v. Delta Printing Ltd., 2017 ONSC 182

Starting in 1999, Mr. Vinette worked for National Printers as a saddle stitcher. In 2011, National Printers went bankrupt and Delta Printing took its place. Delta Printing offered Mr. Vinette a new contract. This contract included the following termination clause:

Termination Without Cause: Delta may terminate your employment at any time on a without cause basis by providing you with written notice of termination or payment in lieu of that notice and severance pay, if applicable, mandated by the ESA.

 In the event of without cause termination Delta will continue those benefits mandated by the ESA for the period required by the ESA, and you will be responsible for the replacement of such benefits thereafter.

In 2015, Delta Printing terminated Mr. Vinette, offering him 8 weeks’ pay based on the employment contract. Mr. Vinette sued for wrongful dismissal, arguing that the termination clause was unenforceable. He also argued that he was an employee for 16 years, even though he signed a contract with Delta Printing in 2011.

The Decision

The Court agreed with Mr. Vinette, finding that the clause was unenforceable. The termination clause did not state that Mr. Vinette would continue receiving benefits during the notice period. Because benefit continuation is mandatory under the Employment Standards Act, the termination clause was found unenforceable.

The Court also found that he was employed for a total of 16 years. Even though he signed a new contract with Delta Printing in 2011, the Court found that Mr. Vinette did the same job in the same place. Further, because the employer failed to tell Mr. Vinette that they would not recognize his years of past service, Mr. Vinette’s service with the previous employer was counted as part of his new contract.

When he was fired, Mr. Vinette worked for 16 years, had a high school education, and was 58. He also held a job that was becoming scarce. Based on these factors, the Court awarded him 15 months pay in lieu of reasonable notice.

Lessons for Employees

  1. Before you sign an employment contract, think about having an employment lawyer review it so you understand the terms and conditions of your employment.
  2. Before signing a severance package, think about having, an employment lawyer review the package. The employer may be relying on a termination clause that is not legally enforceable and you may be entitled to considerably more termination pay.

“The material and information in this blog and this website are for general information only. They should not be relied on as legal advice or opinion. The authors make no claims, promises, or guarantees about the accuracy, completeness, or adequacy of any information referred to in this blog or its links. No person should act or refrain from acting in reliance on any information found on this website or blog. Readers should obtain appropriate professional advice from a lawyer duly licensed in the relevant jurisdiction. These materials do not create a lawyer-client relationship between you and any of the authors or the MacLeod Law Firm.”

Is My Termination Clause Good?

By , March 6, 2017 9:34 am

A termination clause in an employment contract states how much notice of termination an employer is required to provide an employee. The employer can provide working notice of termination or pay instead of working notice, but almost all employers provide termination pay instead of working notice.

A termination clause that is poorly written will not be enforced by a court. If the clause is not enforceable then the employee is usually entitled to a longer notice period (or more termination pay).

A recent decision by the Ontario Court of Appeal (“OCA”) has found that a termination clause was not enforceable. The Court ordered the employer to pay the terminated employee almost double the termination pay she would have received under the termination clause.

Wood v Fred Deeley Imports Ltd.

In this case, the Employer terminated an 8-year Employee after it sold its assets to Harley-Davidson. The Employer provided the Employee 13 weeks’ working notice, where it paid her salary and benefits. After the working notice, the Employer provided the employee with 8 weeks’ termination pay. The Employer took the position that the 13 weeks’ notice and 8 weeks’ termination pay was what it owed the employee pursuant to her termination clause.

In the initial decision, the judge found that this termination clause was enforceable. Despite not expressly mentioning that the Employer would continue contributing to the Employee’s benefit plans, the judge found that it was enforceable as it provided more than the minimum payment under the Employment Standards Act. The judge also noted that the Employer continued its benefit contributions throughout the notice period. The Employee appealed to the OCA.

The OCA overturned the motion judge, finding that the termination clause was not enforceable. There were two main reasons why the OCA concluded this clause was not enforceable.

First, the termination clause did not include that the Employer would contribute to the Employee’s benefit plan during the notice period. Because the Employment Standards Act requires benefit continuation during the notice period, the termination clause was unenforceable.

Second, the termination clause did not properly include severance pay. The Employment Standards Act also requires that certain Employers provide severance pay upon termination. Because the termination clause was unclear on severance pay, the clause was found unenforceable.

Lessons for Employees

  1. If you have not signed an employment contract with a termination clause, then you are generally entitled to reasonable notice of termination which can be one month termination pay (or more) for each year of service.
  2. If you have signed an employment contract with a termination clause, this clause may not be legally enforceable. If not, you are entitled to reasonable notice of termination which is almost always more notice than most employees are entitled to receive under the employment contract.
  3. Many terminated employees are offered a severance package in exchange for signing a release which is an agreement not to sue an employer for more termination pay. If you are terminated, you can consult with an employment lawyer to determine whether the termination pay you are being offered is fair. If you have signed an unenforceable termination clause, you may be entitled to more termination pay than set out in your employment contract.

If you would like to speak to a lawyer at MacLeod Law Firm, you can reach us at [email protected] or 647-204-8107.

The material and information in this blog and this website are for general information only. They should not be relied on as legal advice or opinion. The authors make no claims, promises, or guarantees about the accuracy, completeness, or adequacy of any information referred to in this blog or its links. No person should act or refrain from acting in reliance on any information found on this website or blog. Readers should obtain appropriate professional advice from a lawyer duly licensed in the relevant jurisdiction. These materials do not create a lawyer-client relationship between you and any of the authors or the MacLeod Law Firm.

 

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