A Fatal Flaw can Render an Employment Contract Moot

Written on behalf of Peter McSherry

Employers work hard to find an employment contract that is enforceable, usually in an attempt to minimize severance claims. It is clear that the employer may indeed “contract-out” of the common law severance claim based on the implied term to provide reasonable notice. There are a host of roadblocks in its path to success, however, the most basic of which is the need to comply with the minimum standards by the provincial Employment Standards Act. Usually, the failure to meet these standards will allow the court to toss the contract, meaning the termination claim will be determined by common law standards, which are often comparatively generous.

The Present Case

The case in question dealt with a contract that stated the worker would receive only the minimum severance payments defined by the statute upon termination. This term was fine and enforceable.

That said, the agreement also said that the employee would be entitled to company benefits only for the statutory notice period. This was also compliant.

However, the company then made its fatal error. The contract excluded short and long term entitlement to disability benefits for the statutory period. This provision was in violation of the statutory mandate that all benefits be continued for this period.

The case turned on this flaw. The employee was awarded 21 months’ compensation in the total sum of $112,000 for wrongful dismissal, n addition to the sum already paid in the amount of $55,000, this being the statutory payments. In addition, the employee was awarded $32,000 in costs.

The case is significant not only for the plaintiff but for other employees covered by the same contract.

Lesson to be Learned

The reader of these posts will know that the written agreement is not necessarily to be taken at face value. The law is replete with subtleties that mandate legal review of employee contracts. Had the plaintiff in this case declined legal advice, a considerable sum would have been lost.

Get Advice and Know Your Rights

It is important to take advice and know your rights.  Get advice. Learn your rights. Then decide. Contact the offices of Guelph employment lawyer Peter A. McSherry. We can guide you through the issues, help you understand your rights, and defend your position. Contact us online or by phone at 519-821-5465 to schedule a consultation.