December 3, 2015 By: Alison McEwen
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In Oudin v Le Centre Francophone de Toronto, an odd and surprising judgment at the end of October, Justice Dunphy of the Ontario Superior Court used a waiver and severability clause to save a provision that the plaintiff argued was ambiguous and violated the minimum requirements of the Employment Standards Act, 2000 (“ESA”). What was strange about the decision was that Justice Dunphy agreed that parts of different provisions were in fact invalid. But instead of striking out the clause, Justice Dunphy used the waiver and severability clause to carve out those parts, and attempted to rewrite the contract retroactively. And then he relied on the good behavior of the employer to stamp out any potential ambiguity.

For example, Justice Dunphy found that section 4, which included a list of reasons whenimmediate termination was acceptable, contained the invalid reason of termination for “continuing incapacity considered permanent”. This clear violation did not worry him, however, as he could simply extract that part of the list with what he argued was “no violence” to the integrity of the remainder of the section.

The plaintiff also claimed that the clause was ambiguous, as it appeared that the employer might be permitted to give only 15 days’ notice, even where the ESA required a greater number. Not to fear, said Justice Dunphy, it was the uncontradicted evidence of the employer that it was the universal practice to give whatever amount was higher. So there was “no reasonable fear here of an employee being tricked into believing they have no rights by an unscrupulous employer seeking to fool him or her into believing that some lesser standard is permitted”. And even if it was a violation of the ESA, “there can be no doubt that the minimum revision necessary is simply to remove the unlawful contracting out (in this case, the reference to 15 days)”.

There was no mention of the fact that the termination clause said that employment could be terminated anytime without cause for any reason (you mean, except for reasons that violate the Human Rights Code, right? Oh, don’t worry, we can read that one in too), or the fact that the clause referenced only notice and salary payable, meaning there was no reference to ESA severance or the benefits an employee is entitled to under the ESA (don’t worry, I am sure we could have read those in as well).

Here is the problem with this logic: an employer could then write whatever it wanted in the employment contract, as long as there is a severability clause. The Court could then re-write the entire contract, if necessary, to be in compliance with the law. This does not make a ton of sense legally.

Not only that, but this only works if the employee knows to ask the Court to re-write the contract. It relies on one of two things occurring: 1) either employers will follow the ESA voluntarily, even when the contract is ambiguous or does not require them to do so; or 2) that employees are savvy enough in the intricacies of employment law to catch these and make sure that the employer toes the line. Justice Dunphy felt that because the plaintiff was “well-educated” (there was no evidence about his education in the decision, and this was a summary judgment, so evidence would have been restricted to what was in affidavits), the concerns that many employees might not be aware of the minimum requirements, which was outlined by the Supreme Court of Canada in Machtinger v. HOJ Industries Ltd., did not apply here.

I would like to point out that if we could rely on all employers to do the right thing voluntarily and give employees what they are entitled to, then I would have a significantly smaller practice than I currently do. Don’t get me wrong, there are a lot of great employers out there, but employment law as a practice area exists because some employers won’t voluntarily toe the line.

That leaves the idea that “well-educated” people know their entitlements. Putting aside the fact that employees who are not “well-educated” will be left high and dry (they won’t know that the contract is invalid, and so won’t ask a court to re-write), I don’t think education actually solves the problem. You could have a PhD in astro-physics, but I am not sure how that translates to knowledge of your basic employment entitlements. Even other lawyers struggle with employment law. I have seen some employment contracts drafted by corporate counsel that are truly cringe-worthy (or, like shooting fish in a barrel, depending on which side of the table you are on). And I am not trying to deride corporate counsel in any way; I would be useless at drafting an M&A agreement. But that is the point: even if you are educated in law, if employment law is not your specialty it is hard to know all of the ins and outs. And the overwhelming majority of employees are not lawyers (and not all lawyers are employees…. But that is a different case!).

The Supreme Court of Canada has said that it is a concern that many employees might not be aware of the minimum requirements. There is nothing in this case that assuages that concern. The Supreme Court has also imposed into the common law of contracts the doctrine of honest dealing. Unless employers are planning to start drafting in plain language that is comprehensible to a lay person, the fact that an employee is “well-educated” should not mean that the employer can simply rely on a severability clause and the Court to take out the really egregious parts of the contract. Employees will assume their employer is within the law, and I fear that many will be left without even the bare bones entitlements outlined in the ESA.

This content is not intended to provide legal advice or opinion as neither can be given without reference to specific events and situations. © 2017 Nelligan O’Brien Payne LLP.

Service: Employment Law