Source: http://barryfisher.ca/employmentlawblog/just-saying-just-cause-makes-esa-termination-clause-possibly-illegal/
Timestamp: 2019-04-22 07:13:17+00:00

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In Khashaba v Procom Consultants Group , ( 2018 ONSC 7617) Justice Carole Brown had to rule on the legality of the following clause in an employment contract.
(b) Termination for Cause Procom may, at its option, terminate your employment immediately for cause, without prior written notice or compensation of any nature. For these purposes, “cause” means any grounds at common law for which an employer is entitled to dismiss an employee summarily without notice or compensation in lieu of notice.
Does the Employment Agreement violate the ESA?
 The “Termination for Cause” provision of the Employment Agreement does not comply with the ESA as it allows for termination without notice or termination pay for conduct meeting the standard of just cause at common law, while the ESA requires the higher standard of “wilful misconduct”.
 Plester v. Polyone Canada Inc., 2011 ONSC 6068 (CanLII), aff’d 2013 ONCA 47 (CanLII), considered the difference between wilful misconduct and just cause at common law, concluding that wilful misconduct is a higher standard. Wilful misconduct involves an assessment of subjective intent, whereas just cause is a more objective standard. Wilful misconduct is colloquially described as “being bad on purpose.” Careless, thoughtless, heedless, or inadvertent conduct, no matter how serious, does not meet the ESA wilful misconduct standard. By contrast, common law just cause for dismissal may be found on the basis of prolonged incompetence, without any intentional misconduct. See also Cummings v. Quantum Automotive Group Inc., 2017 ONSC 1785 (CanLII) at para. 37.
 The saving language in the “Termination without Cause” provision, which states that no employee will get less than they are entitled to under the ESA, cannot apply to save the “Termination for Cause” provision. Procom relies on Burton v. Aronovitch McCauley Rolley LLP, 2018 ONSC 3018 (CanLII), in which the court found that interpreting the employment agreement in accordance with the intention shown in a “saving provision” meant that there was no violation of the ESA. However in Burton, the saving language was obviously applicable to the part of the termination clause that allegedly violated the ESA. The saving language came after the part of the termination clause that allegedly violated the ESA and stated that “notwithstanding the foregoing, and for greater certainty” an employee will be entitled to everything the ESA requires. Here, the provisions are separate, and it is not at all clear that the saving language within the “Termination without Cause” provision applies to terminations under the “Termination for Cause” provision.
 The principle that “where the language of a termination clause is unclear or can be interpreted in more than one way, the court should adopt the interpretation most favourable to the employee” must also be considered: Wood v. Fred Deeley Imports Ltd., 2017 ONCA 158 (CanLII)at para. 40, citing Ceccol v. Ontario Gymnastics Federation (2001), 2001 CanLII 8589 (ON CA), 149 O.A.C. 315.
So far this looks like a victory for the employee.
However the judge then effectively severed this illegal section from the rest of the clause.
 The “Early Termination” provision of the fixed term contract is made up of five separate clauses. Clause (b) is “Termination for Cause”, Clause (c) is “Termination without Cause.” The remaining clauses are not about the manner in which the employer can terminate the employee. Clause (a) governs resignation by the employee, Clause (d) provides that “these provisions” shall remain in effect throughout the agreement and any renewal or extension of the agreement, and Clause (e) governs the employee’s responsibility to return the client’s property if the employment terminates for any reason.
 The non-compliance with the ESA is within only one of the five clauses: the “Termination for Cause” clause. This distinguishes it from the cases the applicant cites which state that one violation of the ESA renders an entire termination provision void. In North v. Metaswitch Networks Corporations, 2017 ONCA 790 (CanLII), Wood v. Fred Deeley Imports Ltd., 2017 ONCA 168 (CanLII) and Miller v. A.B.M. Canada Inc., 2014 ONSC 4062 (CanLII), relied on by the applicant, all terms of the agreement governing an employee’s termination were contained within one clause. The illegal aspects were sentences or missing words that resulted in an illegal attempt to contract out of an ESA minimum. The courts in those cases held that the entire clause should be void because of the illegality. In Andros v. Colliers Macaulay Nicolls Inc., 2018 ONSC 1256 (CanLII), the termination provision contained two sub-clauses. The trial judge analyzed each separately and found that each were separately illegal and void.
 I interpret the references in the case law to a single violation of the ESA rendering an “entire termination clause” void to mean that the entire clause which contains the illegality should be void. No words or sentences in the clause containing the illegality should be valid or enforceable for any purpose. In this context, the entirety of the “Termination for Cause” clause should be void.
 The other clauses of the “Early Termination” provision remain valid and enforceable. This result accords with the objectives of the ESA. The “Termination without Cause” provision does not violate the ESA. It also contains explicit language showing the parties’ intent that it should comply with the ESA. The other clauses in the “Early Termination” provision do not relate to the manner in which an employer can terminate an employee’s employment. There is no reason why they should not remain valid and enforceable.
 Although I do not rely on this clause, I also note that the agreement contains a severability clause which indicated the parties’ intention that illegal portions of the agreement should be severed.
 I am aware of Iacobucci J.’s statement in Machtinger, confirmed by the Ontario Court of Appeal in Wood, that termination clauses should be interpreted in a way that incentivizes employers to draft ESA-compliant termination clauses at the outset. However, in finding only the “Termination for Cause” clause void, I am not interpreting, rewriting or reading down any part of the Employment Agreement to make it comply with the ESA. I am interpreting the illegal clause, the “Termination for Cause” clause as void.
 I am not of the view that Machtinger, and the jurisprudence that follows it, require that upon finding a violation of the ESA in a termination clause, a court must ignore ordinary contract principles, the intentions of the parties, and common sense. I agree with the statement of the B.C. Court of Appeal in Miller v. Convergys, 2014 BCCA 311 (CanLII), leave to appeal denied, at paras. 14-15 that “the construction of an employment contract remains an exercise in contractual interpretation, and the intentions of the parties will generally prevail, even if this detracts from employment law goals that are otherwise presumed to apply.” In this case, the contract evinced a clear intention to comply with the ESA, the violation of the ESA was in a separate provision from the rest of the contract, and the contract contained a severability clause.
A duty of care with respect to representations made during pre-contractual negotiations is over and above a duty to be honest in making those representations. It requires not just that the representor be truthful and honest in his or her representations. It also requires that the representor exercise such reasonable care as the circumstances require to ensure that the representations made are accurate and not misleading.
 In Queen v. Cognos Inc., Cognos represented to Mr. Queen that the job he was applying for existed, when in fact it was subject to budgetary approval. Similarly, Procom represented to Mr. Khashaba that the job with Alectra existed, when in fact it knew that Alectra had decided to give the job to another candidate. Procom was not truthful and honest in its representations. There is no doubt that it should have taken more care to ensure that Mr. Khashaba was aware of the truth of the situation. However, the relationship between the wrong done to Mr. Khashaba and the violation of the ESA in the Employment Agreement is no more than a coincidence.
 For all of these reasons, I find that while the “Termination for Cause” provision is void, the other clauses of the “Early Termination” provision remain valid and enforceable.
As the judge seemed to rely more on the fact that in this case there might not have even been a termination of employment, it may be that her reasoning on the illegal aspects of the case are obiter, in other words, not binding .
It also seems to flow that if the termination with just clause sentence is contained in the same paragraph as the clause as the termination without cause clause, then the whole clause is illegal .
This minor grammatical difference would seem to add even more uncertainty to an already uncertain area of the law.

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