Employer’s Apology Cannot Cure Contract Breach, Court Rules

Written on behalf of Peter McSherry

In a recent Ontario case, the court concluded that the employer had repudiated the employment contract by its post-termination conduct and its termination provisions could therefore not apply to the terminated employee.  As a result, the employee was entitled to six months’ pay in lieu of notice.

Employee Terminated Without Cause

The employee began working for the employer in September 2014 as a customer advocate and was subsequently promoted to sales representative. 

Following her promotion, the employee’s new 2018 employment contract provided that the employer could terminate her employment without cause by providing two weeks of notice or pay in lieu of notice plus the minimum notice or pay in lieu of notice, benefits and severance pay required by the Employment Standards Act (“ESA”).

The employee was terminated, without cause, on March 31, 2020. The employer refused to pay the employee the agreed-upon two weeks’ pay unless she first executed a Full and Final Release, which was presented to the employee as a component of an “Enhanced Severance” offer. The employee refused.

The day after her termination, the employee sent a letter to the employer pertaining to her dismissal. The employer replied by letter on April 2, 2020 and demanded, again, that the employee execute a Full and Final Release as a condition to her receipt of the two weeks’ pay owed to her by the termination without cause provision. 

The employee then retained a lawyer who wrote to the employer that its treatment of its employee was in breach of the 2018 employment contract. The employer responded on April 24, 2020, through its legal counsel, and apologized for requiring that the employee sign a Full and Final Release. The employer then transferred to the employee the equivalent of two weeks’ pay and the monetary value of her entitlements under the ESA.

The employee brought a motion for summary judgment, seeking $26,907 in damages for wrongful dismissal. She submitted that the employer had repudiated the 2018 employment contract and she was thereby entitled to damages for wrongful dismissal at common law without the limitation imposed by the termination without cause provision in the employment contract. 

In response, the employer submitted that it had merely made a mistake, had since apologized, and should still be allowed to limit the employee’s entitlements on dismissal to those set out in the termination without cause provision. 

Court Finds that Employer Had Repudiated Employment Contract

The court began by explaining that repudiation of a contract, whether an employment contract or otherwise, “occurs by the words or conduct of one party to a contract that show an intention not to be bound by the contract”. As such, the test is whether, considering surrounding circumstances, including the nature of the contract, the motives which prompted the purported breach, and the impact of the party’s conduct on the other party, a reasonable person would conclude that the breaching party no longer intends to be bound by the contract with the result that the innocent party would be deprived of substantially the whole benefit of the contract. Finally, the court explained that a party can repudiate a contract without subjectively intending to do so, because the assessment is made objectively.

In the present case, the court noted that the 2018 employment contract imposed on the employer the contractual duty to pay the employee two weeks of pay upon termination without cause and without notice, in addition to her entitlements under the ESA. However, the court found that the employer did not abide by its duty under the contract.

The court therefore concluded that the employer had showed an intention not to be bound by the 2018 employment contract, finding that the contract had been repudiated when the employer had unilaterally imposed demand for the employee to comply with its new terms and refused to pay her the two weeks’ salary. The court then stated:

“This breach could not subsequently be cured by the counsel’s apology on behalf of [the employer] and by post-breach payment of the amounts owed, absent concurrence by [the employee], which was not forthcoming.”

As a result, the court held that the employer had repudiated the employment contract. As such, the court ordered that the employee was entitled to pay in lieu of notice for the reasonable period under common law, which it determined to be six months.

Get Help

If your employment has been terminated without reasonable notice or severance from your employer, you might have a claim for wrongful dismissal. Even if your employer claims that the notice or severance is reasonable, it pays to check with a highly qualified employment lawyer to ensure that all legal requirements were, in fact, met by your employer. The employment laws are complicated and intertwined. The basis for a claim might exist even if your employer claims to have followed the law. 

At Peter A. McSherry Law Office, I provide each of my clients with a full assessment of his or her case. Disputes in wrongful dismissal claims are usually based on severance pay, benefits and/or the timeliness of the notice. However, if an employer claims or cites misconduct as the cause for dismissal, reasonable notice is not needed. We can discuss the facts of your case. I can help you discover and weigh your options in a straightforward manner with respect for your needs and objectives. I can protect your rights. Call me at 519-821-5465 or contact me by e-mail to schedule a consultation.