Andrew N. Vey

An employee challenged the enforceability of a termination clause in his employment contract with IBM.

The motion judge found the clause ambiguous and unenforceable, holding that it did not clearly exclude the employee's entitlement to damages at common law.

The Court of Appeal reversed, holding that when read as a whole, the termination clause was unambiguous and clearly excluded common law damages.

The clause provided for notice or pay in lieu calculated according to a formula, with a failsafe provision ensuring compliance with the Employment Standards Act.

The court found no violation of the ESA and awarded costs to IBM.

The defendant employer brought a motion for summary judgment to dismiss the plaintiff's wrongful dismissal claim, arguing the termination clause in the employment contract was enforceable.

The plaintiff argued the clause violated the Employment Standards Act, failed to rebut the common law presumption of reasonable notice, and was breached by the employer.

The court found the termination clause was ambiguous regarding whether the exclusion of common law notice applied to the failsafe provision.

Resolving the ambiguity in favour of the employee, the court dismissed the motion and ordered the issues of reasonable notice and damages to proceed to trial.