COURT FILE NO.: CV-15-525137
DATE: 20150922
SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Brent Riskie, Plaintiff/Moving Party
AND:
Sony of Canada Ltd. Defendant/Responding Party
BEFORE: Sean F. Dunphy J.
COUNSEL: Hena Singh, for the Plaintiff/Moving Party
George Avraam and Cherrine Chow, for the Defendant/Responding Party
HEARD: September 16, 2015
ENDORSEMENT
[1] This is a wrongful dismissal case with an unusual twist. Mr. Riskie sought an accommodation from his employer. His was moving back to Ottawa for pressing family reasons and wished to find a way to keep his Toronto-based job managerial job. He proposed to work from home, telecommute and come to Toronto regularly and on an as-needed basis. He knew that his employer was not in favour although his immediate supervisor pushed the issue on his behalf. The plaintiff was never told he could not have stayed put in Toronto under his former arrangements and in fact assumed that he could have. Prior to completing his move, he clearly understood that his telecommuting proposal would not be agreed to by Sony except at the price of a new fixed-term employment contract. After considerable hesitation and some negotiation, he agreed and signed the contract on July 28, 2014. He hoped he would prove his new arrangements could work and be offered a renewal but knew it was a limited term contract with no guarantees. He was later advised on February 18, 2015 that his contract would not be renewed and it therefore expired in accordance with its terms on March 31, 2015. He received all statutory severance and termination amounts – about seven months in notice and payments (the latter with some delay).
[2] Mr. Riskie now claims that the new employment agreement he signed was void and seeks summary judgment fixing the period of reasonable notice that he would be entitled to absent the fixed-term contract.
[3] This unfortunate situation is complicated by the fact that, by all accounts, the plaintiff performed quite well in his newly-designed arrangement even if his CEO remained dead set against such “work at home” arrangements for managers of his level. However, by reason of an internal reorganization of Sony’s North American operations announced in late 2014, the entire department was restructured in early 2015. A number of employees in his group were let go. Whether he might have won over the CEO had the restructuring not occurred will never be known.
[4] As sympathetic as I am to Mr. Riskie’s plight, I cannot agree with his submission that the contract he signed was void in whole or in any (material) part. He freely accepted a fixed-term contract. While he had hopes that it might be renewed, he fully appreciated that he had no rights to require a renewal. Sony was accommodating him, not the other way around. It was his choice to move to Ottawa and his choice to accept this fixed-term proposal rather than returning to the status quo ante.
[5] In the circumstances of this case, I must find in favour of the validity of the contract he signed with his employer. To hold otherwise would send the wrong message to employers faced with the prospect of taking some uncertainty or risk to accommodate their valued employees.
Overview of Facts and Procedure
[6] This matter came on for a hearing as a motion for summary judgment by the plaintiff under Rule 20.01(1) and Rule 20.04(2)(a) of the Rules of Civil Procedure. After an appearance in Civil Practice Court, it was scheduled for a hearing on an agreed timetable without viva voce evidence. Neither party contested the appropriateness of proceeding to determine the questions raised by way of summary judgment nor did I encounter any factual issues which it appeared to me would be more appropriately left to resolution following a trial. There were a few areas of contradiction between the evidence of the witnesses who provided affidavits or were subjected to cross-examination. I have found that most areas of conflict were in relation to matters of little materiality to the narrow question I must determine or were of such a nature that I can resolve them by reference to the “toolbox” in Rule 20.04(2.1) of the Rules of Civil Procedure. I found no need for a trial to resolve these questions nor did either party suggest that I should.
[7] Mr. Riskie began working for Sony on June 9, 1989. His employment was terminated on March 31, 2015 just shy of his 26th anniversary of working with Sony. He was 45 years old.
[8] There is no issue in this case as to Mr. Riskie`s performance – he was a valued and highly paid employee who performed well and had been promoted over the course of his career. He had no written contract of employment and was thus employed for an indefinite term subject to termination upon reasonable notice. In 2014, he had recently been named Director of Sales, Professional Solutions Group at Sony and had a number of employees reporting to him. There is no allegation of termination for cause. At the time Mr. Riskie announced his move to Ottawa in spring 2014, there is no suggestion that Sony was in any way unhappy with him.
[9] Mr. Riskie reported to Mr. Ibbotson – the then Senior Vice President of Sales and Marketing. At some point in or about April, 2014, Mr. Riskie advised Mr. Ibbotson that he and his family were moving to Ottawa.
[10] This raises one of the points of factual contention separating the parties. In oral argument at least, the plaintiff sought to suggest that his decision to move was not yet definitive when he brought the matter up with Mr. Ibbotson. I have carefully read the cross-examination transcripts of Mr. Riskie and Mr. Ibbotson. The latter is quite clear that Mr. Riskie presented the move to Ottawa as something which had been already firmly decided. There was no question in Mr. Ibbotson’s mind of Mr. Riskie not going forward with it. Mr. Riskie was going to Ottawa whether or not he managed to work out a satisfactory arrangement with Sony. Indeed, Mr. Ibbotson assumed that Mr. Riskie had resigned even if he conceded that the exact word hadn`t necessarily been mentioned by Mr. Riskie to him.
[11] Mr. Riskie did not contradict Mr. Ibbotson in any material way on his own cross-examination. He denied actually resigning when he announced his move – Mr. Ibbotson allowed that might be accurate. Importantly, he presented no positive evidence as to when exactly his family did definitively decide to move. If the timing of his wife`s acceptance of a new position in Ottawa, the purchase of new home in Ottawa or any similar objective hallmark of a definitive decision to move had been helpful on this issue, I am sure I would have seen positive evidence of it. He neither pleaded nor alleged any sort of change of position in reliance upon Sony agreeing to anything and subtle suggestions to that effect in oral argument, un-supported by any hard evidence which would have been easily available to Mr. Riskie, cannot be the basis of any findings.
[12] I this instance at least I prefer the more straightforward comments made by both witnesses on their cross-examinations to the carefully-crafted words employed in affidavits. There was no real contradiction of note between the two transcripts of cross-examination of Mr. Ibbotson and Mr. Riskie. However, I note that Mr. Ibbotson also lost his employment with Sony and yet gave testimony which I found to be frank, candid and believable.
[13] I find that Mr. Riskie and his family had firmly decided to move to Ottawa in the spring of 2014 prior to requesting an accommodation from Sony and that decision was in no way predicated upon the reaction, if any, of Sony.
[14] This finding does not necessarily imply that Mr. Riskie was certainly going to resign from Sony as Mr. Ibbotson seems to have assumed. Mr. Ibbotson and indeed Mr. Wilson all agreed that Mr. Riskie was a valued employee. They had no reason or desire to terminate his employment at that time. Mr. Riskie always assumed that he had the option of remaining based in Toronto despite his family`s move. Sony never suggested he did not have that option, although Mr. Riskie never appears to have asked them to consider the question. While he considered that he had the option of remaining in his job based in Toronto while living in Ottawa, it was clearly not his preferred option for obvious reasons. Commuting would be expensive, time consuming and take away from his time with his family. Such a decision would not be for the faint of heart. However, he considered that door to be open to him and Sony never suggested otherwise.
[15] Sony had no office in Ottawa and Mr. Riskie was well aware that Sonys president and CEO, Mr. Wilson, was quite firmly opposed to the idea of director-level employees such as Mr. Riskie with other Toronto-based employees reporting to him attempting to carry on their duties in a telecommuting structure. He proceeded with his plans knowing of Mr. Wilsons hostility to the idea.
[16] In April and May 2014, Mr. Ibbotson and Mr. Riskie discussed a number of possible solutions to his dilemma, including the possibility of an entirely different and lower-level post in sales. The nature of those discussions is not material. There is no question on the evidence before me – and I pressed the plaintiff’s counsel on this point repeatedly – that there was never an actual agreement on the terms of Mr. Riskie working in a telecommuting format out of Ottawa before June 13, 2014. As of June 13, 2014, Sony had yet to finally agree to any proposal of Mr. Riskie on this subject. There was no question of Mr. Riskie altering his position to his detriment since his move to Ottawa was already decided. That train had left the station some time earlier.
[17] A “couple of days” before June 13, 2014, Mr. Ibbotson advised Mr. Riskie that Sony would consider accommodating his request but would require that his position change from that of an indefinite employee to a contract employee with a fixed term as a condition of approving the arrangement. He received the actual draft contract proposed on June 13, 2014. Mr. Ibbotson was on his way out of the country for two weeks and the two did not have an opportunity to discuss the terms of the proposed agreement before he left.
[18] The task of discussing the proposed written employment agreement fell to Ms. Susan Bean, the former vice president, human resources at Sony. Ms. Bean had been the draftsperson of the proposed contract based upon written instructions from Mr. Ibbotson. There were a number of aspects of the proposed agreement that Mr. Riskie did not like and expressed his strong disagreement with. He was cross-examined on these points. A non-exhaustive list of some of the issues raised:
Term: the proposed agreement had a fixed term ending December 31, 2014 and had no renewal rights. Mr. Riskie was able to negotiate that to March 31, 2015 with Mr. Ibbotson’s concurrence. Mr. Riskie wanted a right to renewal unless he failed to prove himself. He was denied that assurance.
Severance rights: Mr. Riskie specifically admitted that he did not wish to lose his existing rights to severance and sought to negotiate to preserve these unless the arrangement “did not work out”. He was not successful in that negotiation (this did not affect his rights to the statutory minimum amounts of course).
Vacation pay: Mr. Riskie was upset that the company applied a “standard” contract employee vacation policy of 4% instead of the 10% that he had at the time. In the end he accepted this reduction in his entitlements reluctantly.
Non-competition clause: Mr. Riskie protested the restrictive non-competition clause he was asked to sign. In the end, he successfully negotiated modifications to this demand of Sony.
[19] Each of these issues in the proposed written employment agreement represented very material and adverse changes to the terms of his employment with Sony by comparison to the status quo ante which he continued to consider remained an option open to him.
[20] A second issue of some controversy raised on the evidence surrounds the reason for the fixed-term contract. Mr. Wilson – the president and ultimate decision maker of Sony in Canada – was adamant that he understood the entire arrangement to be no more than a short-term accommodation to permit Mr. Riskie time to look for a job in Ottawa while giving Sony a transition period to look for a replacement for him. Mr. Ibbotson clearly conveyed messages internally consistent with that overall intent to Mr. Wilson and Ms. Bean. However, there is no evidence that he ever conveyed that message with quite that degree of candour to Mr. Riskie. Mr. Ibbotson clearly hoped that Mr. Riskie would be able to demonstrate that the arrangement could work satisfactorily and that Pharaoh’s heart might eventually be softened.
[21] Unfortunately, things did not work out that way. A short while later, an internal decision was made to merge the North American operations of Sony. It was communicated to management in October although the precise impact of the decision “on the ground” would take time to work out. Any steps to replace Mr. Riskie or otherwise address Sony’s needs in that regard were put on hold until details of the merger were worked out and the impact on the Canadian operations understood. When this was done in February, a large number of Mr. Riskie’s group were ultimately let go (as indeed were Ms. Bean and Mr. Ibbotson at some point).
[22] I do not see that the issue of exactly what Mr. Riskie was told about the internal views of Mr. Wilson as to the likelihood of a renewal of the contract is material to this case. Mr. Riskie fully understood Mr. Wilson’s philosophical opposition to the arrangement. He knew that Mr. Ibbotson had gone to bat for him and gotten the best deal that he could. The contract as signed made no promise of renewal. There is no pleading of fraudulent or even negligent misrepresentation in relation to the issue. Nothing in the contract he saw gave him reason to assume a radical change of heart on Mr. Wilson’s part. Mr. Riskie’s own cross-examination evidences his clear understanding that he was taking a risk in signing the contract.
[23] Mr. Riskie had a scheduled vacation for two weeks at the beginning of July 2014. He took that vacation and used the time to complete the move of his family. While on vacation, it was his custom (and the bane of many senior professionals at his level) to bring work along with him on vacation. He did so this time as usual.
[24] Mr. Riskie was due to resume his duties (to the extent interrupted by vacation) on July 15, 2014. He came to Toronto. This appears to be the first time he met Mr. Ibbotson face to face since he first received the draft contract on June 13. They discussed the employment contract. Some changes were made, but Mr. Riskie was advised that no more changes would be considered by Sony. He was told to take some time to think it over.
[25] Mr. Riskie returned to Ottawa and commenced carrying on his previous duties remotely (home office, telecommuting, etc.) in the same fashion as he had proposed to do when Sony gave him the draft contract on June 13.
[26] On July 28, 2014, Mr. Riskie returned to Toronto having proposed to come to the office at least every two weeks. At this time he signed the contract with the changes that had been agreed. Thereafter, he was fully aware that he was a contract employee with a fixed term. He admits this quite candidly, but hoped that he would be able to “make it work” and thereby persuade Sony to make the temporary situation more permanent.
[27] I have deliberately left out of this brief chronology any reference to the formal resignation emailed by Mr. Riskie to Mr. Ibbotson on July 28, 2014. The parties hotly contested the timing and effectiveness of that resignation and when exactly it was requested. In my view, the issue is a red herring. Sony evidently wished to have a resignation in its records to draw a clear line under Mr. Riskie’s former indefinite “full time employee” status which was being replaced by his new fixed-term contract status. As is discussed further below, the resignation had no practical effect even if the intention was clear enough. Whether the resignation was emailed on July 28 one minute after the contract was signed or one minute before is, in my view, irrelevant and I decline to make any findings in that regard. Such artificial distinctions may keep tax practitioners awake at nights but will have no impact on determining the true nature of what occurred here.
[28] The merger of the North American operations of Sony announced internally in or about October, 2014. It took time to work out the repercussions in terms of the organization of the work force of the defendant in Canada. The initial outcome of that planning process resulted in a number of people being let go in February, 2015. It was in this time frame that Mr. Riskie was told that his contract would not be renewed. Needless to say, he was quite disappointed to learn that. Nothing turns on whether this announcement was made the same day as the termination of the employment of other employees or a few days later.
[29] While there was some delay in payment on Sony’s part, there is no issue raised on this motion as to whether Sony has paid all of the minimum statutory severance and termination entitlements of Mr. Riskie. He received payments equivalent to approximately 26 weeks pay (but not benefits) in addition to the six weeks of notice of non-renewal of his contract. Mr. Riskie continues to be unemployed and is, I am sure, diligently seeking alternative employment.
Issues
[30] The following issues are raised by this motion:
a. Was the employment agreement of July 28, 2014 void in whole or as to its fixed term provision by reason of:
i. Want of Consideration?
ii. Duress?
iii. Lack of Agreement?
iv. Breach of the [Employment Standards Act, 2000](https://www.canlii.org/en/on/laws/stat/so-2000-c-41/latest/so-2000-c-41.html), S.O. 2000, c. 41 (the “ESA”)?
b. If required, what period of reasonable notice should have been granted by Sony prior to the termination of the employment of Mr. Riskie?
Analysis and Discussion
i. Consideration
[31] The plaintiff argues that there was no consideration for the entering into of the employment agreement on July 28, 2014. Numerous cases are cited by the plaintiff for the proposition that mere continuation of employment is not consideration sufficient to support a new contract of employment, particularly one which compromises important existing employee rights: Braiden v. La-Z-Boy Canada Ltd., 2008 ONCA 464; Techform Products Ltd. v. Wolda 2001 8604 (ONCA) and Francis v. Canadian Imperial Bank of Commerce, (1994) 1994 1578 (ON CA), 21 O.R. (3d) 75 (C.A.).
[32] The lack of consideration argument appears to be premised on the alleged acceptance by Sony of the “fait accompli” of the plaintiff having moved to Ottawa before signing off on the contract which he had in his hands and was actively continuing to negotiate. This strikes me as a very artificial and unreasonable interpretation of the facts and one which is utterly at odds with the expectations and understanding of both parties.
[33] Sony never accepted the alleged “fait accompli” and the plaintiff had no basis to assume that it had. It was the plaintiff who sought to make significant modifications to his contract of employment by moving to Ottawa – the amendments which ensued were the terms by which the employer agreed to allow those changes. Neither party had any belief that the matter was somehow closed the day Mr. Riskie moved without having signed the contract presented to him.
[34] There can be no doubt that the employer had not agreed to accept Mr. Riskie’s telecommuting proposal without some or all of the alterations to the employment contract that had been proposed to him on June 13. The parties were apart on the terms and continued to negotiate. Mr. Riskie was at all times clearly aware of Sony’s position and continued to seek to change Sony’s mind in whole or in part. He moved to Ottawa and the process of discussion continued. The alleged fait accompli was nothing of the sort. There was no acquiescence by Sony nor is there a shred of evidence to suggest that Mr. Riskie thought they had. This is a technical argument divorced from any real-world substance.
[35] The Braiden (supra), Francis (supra) and Techform (supra) line of cases are simply inapplicable on these facts. This wasn’t a case of “take it or leave it”, it was a case of “take it or return to Toronto”. He took it.
[36] I cannot conclude that the employment agreement of July 28, 2014 was entered into without consideration. There was ample consideration to support the validity of the contract in Sony agreeing to allow Mr. Riskie to perform his prior duties from an Ottawa base with only occasional physical presence in Toronto.
ii. Duress
[37] The plaintiff argues that his signature was required on the employment agreement on July 28, 2014 “in order to continue the teleworking arrangement from Ottawa” even though he had already moved himself and his family earlier in the month. I have fully dealt with this argument in the section above dealing with consideration. Sony had not consented to the teleworking arrangement except on the conditions originally set forth in the draft employment agreement of June 13. Those terms were subjected to negotiation, eventually leading to the July 28, 2014 employment agreement.
[38] On his cross-examination, Mr. Riskie admitted that he had the option of (i) signing the agreement and accepting its terms; (ii) resigning outright and looking for alternative employment; or (iii) returning to Toronto on a full time basis. Sony had never taken any steps to deprive him of the third option and he admitted that he preferred to sign the agreement and make every effort to demonstrate its value to Sony so as to convince them to extend it:
“How it was explained to me was this was a…the contract was to protect the company in case this working arrangement did not work. I truly believed it would work. So the best option for me at that point in time of the three was to be with my family, and to do everything in my power to make this working arrangement work, which I did” (Riskie Cross Examination, p. 27, Q. 170).
[39] This is not a case of duress. The plaintiff relied upon the Techform case (supra). In that case, Rosenberg J.A. adopted a four part list of relevant duress factors to be considered (at para. 32) to which a fifth criterion – whether the pressure was legitimate – was added. I review each of the criteria below.
“Did the party protest at the time the contract was entered into?”
[40] While Mr. Riskie certainly protested numerous aspects of the proposed deal in June, and successfully renegotiated some of them, he did not protest that he was being placed under duress at the time he actually signed the contract on July 28, 2014. To the contrary, he was told on July 16 to give the matter some thought and finalized and signed it on his very next trip to Toronto on July 28. Being given two weeks to think it over is not consistent with coercion or duress.
“Was there an effective alternative course open to the party alleging coercion?”
[41] There was clearly an alternative open to Mr. Riskie and he candidly admitted as much on cross-examination in the passage quoted from above. He could have stayed based in Toronto and commuted frequently. He did not prefer this option, but he had it.
“Did the party receive independent legal advice?”
[42] Whether or not Mr. Riskie sought or obtained independent legal advice was not disclosed to me. However, the fact remains that he was a highly paid, senior executive who was afforded every opportunity to seek such advice if he so chose. The employment agreement was negotiated off and on over a period of about six weeks. There was no time pressure applied to preclude Mr. Riskie from seeking advice. He had the means, the time and the opportunity to do so. He either obtained such advice or was content not to. The employer did not discourage or dissuade him in any way from seeking it.
“After entering into the contract did the party take steps to avoid it?”
[43] Mr. Riskie took no steps to avoid the contract and there is no suggestion that he did anything other than perform to the best of his ability until he was told in February that his hoped-for renewal would not materialize.
“Was the pressure illegitimate?”
[44] There can be no question that Mr. Riskie could have simply resumed his duties full time in Toronto if he was unwilling to accept the contract terms offered by Sony. It was not the option he preferred. His reasons can be readily understood. However, not having a preferred options available is not the test for duress – there must be an illegitimate application of coercive pressure. Sony had no obligation to accommodate Mr. Riskie’s move to Ottawa and it had every right to propose terms on which it might do so. There was nothing illegitimate in Sony attaching conditions to its accommodation of Mr. Riskie`s request.
[45] In my view there can be no basis for concluding that the July 28 2014 employment agreement was entered into by Mr. Riskie under duress.
iii. Agreement on Essential Terms
[46] The plaintiff argues that the employment agreement is unenforceable as the parties had failed to reach consensus on essential terms. While it is true that there were numerous aspect of the June 13 draft employment agreement that Mr. Riskie was unhappy with – including some that he was successful in seeing changed through negotiation – the simple fact of the matter is that he signed the contract with full knowledge of its contents. Mr. Riskie’s evidence was that he was told that no further changes would be agreed to. He also admitted that he chose to sign the agreement presented as it seemed the best option compared to the other two available to him (resign outright or return to the Toronto office and commute home to Ottawa on weekends). On July 28, 2014 there was agreement on the terms and that agreement is reflected in the contract signed on that date. In oral argument, counsel admitted that this argument amounted to little more than a different way of expressing the duress issue which I have previously dealt with.
[47] The plaintiff also sought to suggest that Sony itself had somehow failed to agree to all of the material terms because of the alleged disconnect between Mr. Ibbotson’s view of the potential for renewal and Mr. Wilson’s quite different view. Sony does not allege that the contract as signed does not reflect their agreement. The alleged disconnect between Mr. Wilson who evidently had no expectations that renewal was possible and Mr. Ibbotson who had some hope that Mr. Wilson might have changed his mind is irrelevant. This is not lack of agreement to an essential term. The contract was not at all inconsistent with this state of affairs. It contained no renewal rights nor anything precluding renewal if the parties chose to do so.
[48] On either formulation of the argument, it has no merit and I reject it.
iv. Breach of the ESA?
[49] The paragraph of the Employment Agreement entitled “Term” reads as follows:
“TERM: The term of this Agreement commences July 28, 2014 and ends on March 31, 2015 (“Term”). The term is for an eight (8) month period commencing July 28, 2014, and either party may terminate this employment contract upon thirty (30) days prior written notice to the other party, on a without cause basis”.
[50] The plaintiff’s position is that the provision allowing for termination prior to March 31, 2015 on thirty days’ written notice violates s. 54 (a) and s. 57 (h) of the ESA. As a result of the twenty-six years of employment with Sony, he was entitled to a minimum notice period of eight weeks. As a result, the plaintiff contends that the entire paragraph must be struck from the Employment Agreement with the result that the contract of employment reverts to being one for an indeterminate term which may be terminated only upon reasonable notice.
[51] Section 55 of the ESA provides that “prescribed employees” are not entitled to statutory minimum notice. The defendant argues that Mr. Riskie was indeed a prescribed employee. Section 2(1)(1) of Ont. Reg. 288/01 provides such an exemption for “an employee who is hired on the basis that his or her employment is to terminate on the expiry of a definite term” (emphasis added). Since Mr. Riskie allegedly resigned and was re-hired on the same day under the terms of the Employment Agreement of July 28, 2014, Sony argues that he was “hired” on a “definite term”.
[52] The plaintiff responds that Mr. Riskie was hired in 1989 and was continuously employed by Sony thereafter. There was no break in the employment period the “resignation” of July 28 was a sham. The fact of resignation and re-hiring on the same day under the “new” contract of employment did not interrupt the period of employment. Paragraph 2(2)(b) of Ont. Reg. 288/01 provides that the exemption in s. 2(1)(1) does not apply if “the term expires…more than 12 months after the employment commences”. Since employment actually commenced in 1989, paragraph 2(2)(b) has no application.
[53] I agree with the plaintiff’s reading of paragraph 2(2)(b) of Ont. Reg. 288/01. While it appears likely that the drafter of the regulation did not consider the (doubtless rare) case where an ordinary, indefinite term of employment is converted to a fixed-term employment contract, this is such a case.
[54] I must agree that there was in fact no interruption in the continuity of employment. The resignation demanded and given on July 28, 2014 strikes me as being an entirely artificial attempt to create an interruption in employment where there was in fact none. While the intention of the parties may be clear, the ESA and its regulations are mandatory minimum conditions which cannot be contracted out of. The regulation speaks to the time when “the employment commences”. Looking at the facts of this case and applying the plain and ordinary meaning of the words, I can see no basis to conclude other than that employment commenced in 1989 and not at some time immediately before or after the signing of a new contract of employment on July 28, 2014.
[55] Whatever terminology the parties have chosen to employ, the fact of the matter is that what occurred on July 28, 2014 was an amendment of the contract of employment which began in 1989. Mr. Riskie had a position before that date and he had the same position afterwards. I conclude that s. 55 of the ESA cannot be resorted to by the defendant and that, accordingly, any provision in the July 28 2104 employment agreement which attempted to contract out of the minimum standards of the ESA, including those in s. 54(a) and s. 57(h), is void: s. 5(1) ESA.
[56] What precisely does that conclusion entail in this case?
[57] There is clearly no general prohibition on amending an employment contract to provide for a fixed termination date. On July 28, 2014, Mr. Riskie had just over 25 years of continuous service. The “fixed term” termination date of March 31, 2015 was eight months into the future – far in excess of the minimum notice provision stipulated by ESA. 57(h) of eight weeks. This did not violate s. 57 (h) of the ESA.
[58] The only illegality issue raised in this case is with the optional “early termination” provision which Mr. Ibbotson had demanded in case things simply did not work out. That early termination option was never in fact exercised and is not relied upon by Sony here. This clause permitted termination prior to March 31, 2015 on as little as 30 days notice by either side. That short notice does not pass inspection under s. 57 (h) of the ESA, whatever the intentions of the parties. If my conclusion that employment was not interrupted by the resignation and rehiring events of July 28, 2014, then the corollary is that the parties could not agree to less than the full eight weeks notice of termination stipulated by s. 57(h) of the ESA. Any other agreement is void under s. 5(1).
[59] Does this mean that the entire “Term” paragraph must be considered void or merely the second sentence thereof which provides for the early termination option on only 30 days notice?
[60] The plaintiff strongly argues that I must find the entire paragraph quoted above to be void and not merely the second sentence thereof, relying upon the decision of the Supreme Court of Canada in Machtinger v. HOJ Industries Ltd., 1992 102 (SCC), [1992] 1 S.C.R. 986.
[61] In Machtinger (supra), the employment contract purported to provide for “0 weeks” notice period in one case, and two weeks in another. Whether the “0 weeks” provision was an error or intentional, both provisions were below the minimum period prescribed by the ESA. The Ontario Court of Appeal had found the express contractual provisions to be invalid attempts to contract out of the minimum standards prescribed by the ESA and thus void. Howland C.J.O held that a 7 month period of “reasonable notice” should not be implied into the contract where conduct and the agreement of the parties over a period of time made it clear that such was not their intention. Writing for the majority, Iacobucci J. disagreed and considered the concept of “reasonable notice” to be a mandatory term which can only be contracted out of by “express contractual language to the contrary” (at para. 19) regardless of the evidence as to the actual intentions of the parties. Noting that the ESA provides that any attempt to contract out of the minimum standards of the Act is void (now provided by s. 5(1) of the ESA), Iacobucci J. concluded (at para. 28):
“In this case we are not faced with an entirely void contract, but a contract of which one clause is null and void by operation of statute. I would nonetheless apply the reasoning of Kerr L. J.: if a term is null and void, then it is null and void for all purposes and cannot be used as evidence of the parties’ intention (emphasis added).”
[62] I cannot read Machtinger (supra) as creating any sort of hard and fast rule that any time there is an instance of an invalid attempt to contract out of the ESA that nothing short of the entire offending paragraph can be excised. Neither common sense nor the decision of Iacobucci J. lend themselves to such a radical conclusion.
[63] In Machtinger (supra) it was the “clause” or the “term” that was found to be null and void in that case. The only “clause” or “term” of the present employment contract which has been alleged to breach the ESA is the second sentence of the “Term” paragraph which permitted optional early termination on 30 days notice. That is the only term or clause of the employment agreement that I would find to be null and void in this case. That early termination clause was not in fact relied upon since Sony claims the contract expired in accordance with its terms on March 31, 2015.
[64] The defendant argues, and I agree, that the “fixed term” and the “early termination” provisions are logically and textually independent of each other. The employment agreement is neither incomplete nor incoherent in the absence of one or the other of those two sentences. Indeed, the drafting history makes it clear that the two termination provisions (fixed term and “early termination” upon 30 days notice) were originally two separate ideas in the drafting instructions conveyed by Mr. Ibbotson to Ms. Bean. They are not a package that must stand or fall together.
[65] I have concluded that the fixed term provision of the employment agreement which provided for termination on March 31, 2015 is not null and void pursuant to the ESA.
[66] The plaintiff sought to argue in the alternative that the employment agreement as a whole might be considered to be invalid because of its failure to incorporate essential provisions of the ESA. In particular, it is suggested that the failure to have provided for severance pay in accordance with the ESA minimum amounts tainted the entire agreement.
[67] I find that argument to be untenable.
[68] The ESA provides for a large number of minimum conditions. An employment contract that fails to specifically provide for parental leave, for example, cannot be argued to be entirely void for failure to acknowledge a statutory right which it is at all events powerless to preclude. Obviously, a provision purporting to deny severance pay where it is otherwise payable under the ESA would be null and void, but that argument cannot extend to nullifying a contract that fails to state that the law will be complied with. The ESA provides minimum standards which the parties are required to comply with. A contract that fails to list all such requirements – as few indeed do – is guilty only of preserving trees from unnecessary destruction. A provision which seeks to contract out of the law is unenforceable; a provision which merely promises to obey it is superfluous.
v. Reasonable Notice
[69] I have rejected each of the plaintiff’s grounds for challenging the validity of the fixed term provision of the written employment agreement. Accordingly, the contract expired in accordance with its terms March 31, 2015. No notice of termination is required where a contract expires in accordance with its terms.
Disposition
[70] Having found that plaintiff’s contract of employment had a fixed term expiring on March 31, 2015, it follows that the plaintiff’s motion for judgment must be dismissed. While the defendant did not bring a cross-motion for judgment, both parties concurred at the hearing that in the event I found in favour of the validity of the fixed term of the employment contract (as I have done), it follows that there was no wrongful dismissal and thus the plaintiffs claim should also be dismissed. Accordingly, I dismiss both the motion for judgment and the claim of the plaintiff in its entirety.
[71] The parties did not make costs submissions at the hearing and I am of course ignorant of any offers or counter-offers that may have been made pursuant to Rule 49 of the Rules of Civil Procedure. I am therefore directing the respondent, who has been successful on the motion, to provide me with an Outline of Costs and a written submission (which should be limited to four pages exclusive of the Outline of Costs) within 14 days of the date of release of these reasons. The plaintiff shall have 14 days to file responding submissions (same page limit) and, if the plaintiff chooses, an Outline of Costs that the plaintiff would have claimed in the event he had been successful. While the court’s internal systems efficiently track reserved decisions and the RSJ’s prodding is not lightly to be ignored, costs decisions are not as diligently tracked and can occasionally be delayed unintentionally. I hereby grant either party license to gently prod my assistant for a status report from me if I have not delivered a short decision on the matter of costs within the same time line (i.e. a further 14 days).
[72] I would request that costs submissions and outlines be delivered electronically to my assistant. Case references if any should be to and can be by way of hyperlink if the parties are easily able to accommodate that.
Sean F. Dunphy J.
Date: September 22, 2015