Court File and Parties

COURT FILE NO.: CV-20-647695

DATE: 20211025

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Lorna Campbell-Givons

AND:

Humber River Hospital

BEFORE: W.D. Black J.

COUNSEL: David Vaughan, for the Plaintiff

Rayaz M. Khan, for the Defendant

HEARD: September 3, 2021

ENDORSEMENT

[1] This is a motion for summary judgment in the context of the plaintiff’s claim for wrongful dismissal.

[2] The parties agree, consistent with recent case law, that this is an appropriate case for summary judgment. There are no material facts in dispute and the issues are whether or not the plaintiff is entitled to damages in lieu of notice notwithstanding the terms of a written employment contract between the parties (the “Employment Agreement”) and, if so, what is the appropriate period of notice and quantum of damages.

Facts

[3] The relevant facts not in dispute are as follows.

[4] The plaintiff is 61 years old and commenced employment with the defendant, a public hospital located in the City of Toronto, as a Senior Labour Relations Specialist on January 21, 2019.

[5] The plaintiff’s employment with the defendant was terminated on August 20, 2020, 19 months after it commenced.

[6] The defendant did not allege cause for the termination and paid the plaintiff, upon her termination, three weeks’ pay in lieu of notice, three weeks of benefit continuation, and vacation pay accrued over the notice period.

[7] The defendant maintains that these are the amounts to which the plaintiff was entitled pursuant to the Employment Agreement.

[8] There is some modest debate about the plaintiff’s responsibilities in her position. For the most part, however, the parties agree that as a Senior Labour Relations Specialist, the plaintiff was responsible for building and maintaining a relationship with the union(s) with which she dealt, and representing management at arbitrations and in bargaining.

[9] In that role, the plaintiff was paid an annual base salary of $98,441.89, was enrolled in the defendant’s benefit plan, was enrolled in the defendant’s pension plan, and was entitled to three weeks paid vacation per year.

Issue re: Enforceability of Employment Agreement

[10] The question of whether or not the plaintiff is entitled to additional payment in lieu of notice beyond what the defendant paid her upon termination depends on whether or not the Employment Agreement, and in particular the termination clause therein (the “Termination Clause”), is enforceable. This, in turn, depends on whether or not the Termination Clause complies with the requirements of the Employment Standards Act, 2000, S.O. 2000, c. 41 (the “ESA”).

[11] The Termination Clause contemplates and addresses both termination “for cause” and termination “without cause” (as occurred here).

[12] The plaintiff argues that the “for cause” portion of the Termination Clause – which lists nine non-exhaustive scenarios as examples of circumstances in which the defendant will not provide termination pay and severance pay to the plaintiff – includes at least four scenarios (so four of the nine) which do not accord with the narrow exemption for “wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer” under O. Reg. 288/01 to the ESA. Therefore, the plaintiff maintains the “termination with cause” section of the Termination Clause violates the ESA.

[13] The plaintiff submits that clauses (iii) (demonstrated incompetence); (v) (any material breach); (vi) (any conduct which in the reasonable opinion of the President and CEO of the hospital….tends to bring…disrepute); and (ix) (any other act or omission which would amount to cause), all fall well short of the narrow “wilful misconduct” exemption specified under the ESA regulation.

[14] More particularly, the plaintiff notes that the ESA does not exempt an employer from the minimum requirements to provide termination pay and severance pay in the event of “cause” as the word “cause” does not appear anywhere in the legislation or the regulations thereunder. Rather, O. Reg. 288/01 provides the narrow exemption allowing employers to withhold an employee’s minimum termination entitlements under the ESA (as set out above).

Relevant Case Law

[15] There are various recent cases on which the plaintiff relies in support of her submission that these provisions are contrary to the ESA.

[16] In Plester v. PolyOne Canada Inc., 2011 ONSC 6068, aff’d 2013 ONCA 47, this court confirmed that the exemption under O. Reg. 288/01 is much narrower than the common law standard for just cause. The court noted that there is a wide range of conduct that may disentitle an employee from reasonable notice under common law, but which would not be sufficient to deprive the employee of their minimum termination entitlements pursuant to the ESA.

[17] Justice Brown held, in Khashaba v. Procom Consultants Group Ltd., 2018 ONSC 7617, that a termination clause that excluded termination pay in the event of “cause….at common law” was illegal and contrary to the ESA. Similarly, in Sewell v. Provincial Fruit Co. Limited, 2020 ONSC 4406, the words “for just cause” in a termination provision violated the ESA and rendered the termination clause unenforceable, including the “without cause” portions of that clause.

[18] The recent decision of Sanfilippo J. in Perretta v. Rand A Technology Corporation, 2021 ONSC 2111, addressed a termination provision which, like the one in the case before me, contained a list of categories that the employer would consider to qualify as “cause” for termination. One or more of the items listed in the Perretta termination clause closely resembled items set out in the Termination Clause at issue in this case (and plaintiff’s counsel points to the marked similarity of the “material breach” provisions in the respective contracts).

[19] Sanfilippo J. held that the “material breach” provision before him (along with certain other clauses) breached the ESA. Regarding the 11 categories of cause in the termination clause, His Honour said, at para. 49:

I pause to observe that it is unclear why Rand required its employees to agree to a Termination With Cause Provision that lists Eleven Categories of Just Cause, at all, much less a list that contains some categories that breach the ESA. If it was to set out a form of “code of conduct”, it is misplaced in a Termination With Cause Provision unless the company condones all conduct except that which constitutes “wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer”.

[20] In the recent leading authority Waksdale v. Swegon North America Inc., 2020 ONCA 391, 446 D.L.R. (4th) 725, the Court of Appeal held that in circumstances in which there are provisions within a “for cause” portion of a termination provision that are found to be illegal, the employer cannot excise such illegal provisions from the clause, cherry-picking and relying on otherwise legal language contained in a “without cause” termination clause. The court held, at para. 10, that whether or not the “for cause” provision was relied upon is irrelevant, as is the location of the “for cause” language within the employment agreement:

An employment agreement must be interpreted as a whole and not on a piecemeal basis. The correct analytical approach is to determine whether the Termination Clauses in an employment agreement read as a whole violate the ESA. Recognizing the power imbalance between employees and employers, as well as the remedial protections offered by the ESA, courts should focus on whether the employer has, in restricting an employee’s common law rights on termination, violated the employee’s ESA rights While courts will permit an employer to enforce a rights-restricting contract, they will not enforce Termination Clauses that are in whole or in part illegal. In conducting this analysis, it is irrelevant whether the Termination Clauses are found in one place in the agreement or separated, or whether the provisions are by their terms otherwise linked. Here the motion judge erred because he failed to read the Termination Clauses as a whole and instead applied a piecemeal approach without regard to their combined effect.

Summary of Plaintiff’s Position on Issues

[21] Relying on these authorities (and others) the plaintiff’s position is: that various provisions within the “for cause” portion of the Termination Clause are illegal, that this means that the Termination Clause as a whole violates the ESA, that it does not matter that the “without cause” provisions on which the hospital relied for purposes of the termination did not themselves (i.e., in isolation) violate the ESA, and that in the result the Termination Clause is unenforceable such that the plaintiff is entitled to common law notice damages.

[22] The plaintiff also makes submissions concerning what it labels the “saving” or “failsafe” language in the Termination Clause and about the proper notice period to be applied. I will deal with those submissions below since the argument about the “saving” language comes up most squarely in the defendant’s submissions.

Defendant’s Position

[23] In that regard, the defendant points to the following portion of the Termination Clause, which is located just below the “without cause” portion:

At all times the Employee will receive all employment standards entitlements owing to her in accordance with the Ontario Employment Standards Act, 2000.

[24] This is in keeping with what has been described in some cases as “saving” or “failsafe” language. While the defendant deals with that concept as an alternative submission, its primary position is that this is not “saving” language, but “clarifying” language, confirming a “guarantee” in the Termination Clause that the employee will always and inevitably receive her ESA entitlements. Mr. Khan, for the defendant, argues that following the guidance in Waksdale, one must read the Termination Clause as a whole, including the clarifying language (as Mr. Khan labels it), such that it is clear that the plaintiff will always, whatever the other provisions may say, receive her ESA entitlements as a minimum. The defendant goes further to say that in fact the plaintiff received an extra week of pay on termination, over and above the minimum ESA requirement.

[25] With respect to the provisions of the “for cause” portion of the Termination Clause which the plaintiff says violate the ESA, Mr. Khan while, to be fair, never entirely conceding the point, implicitly acknowledges that read in isolation, those provisions, or some of them, might be seen as being contrary to the ESA. In my view, the four provisions to which plaintiff’s counsel points do in fact violate the ESA. To explain and justify these provisions, Mr. Khan submits that because the defendant is a public hospital, and because, as a hospital, its dealings frequently involve heightened sensitivity, (for example, superadded privacy concerns and the like), it is important for the hospital to enumerate, in the Employment Agreement, various examples of conduct which will stray from the scrupulously cautious and exacting standards required for one working in that setting.

[26] While appreciating the creativity of this submission, I have a couple of difficulties with it. First, I am not sure that any of the enumerated scenarios in the “for cause” section of the Termination Clause would be differently viewed in a hospital setting than any other workplace, or at least many other workplaces. A material breach of an employment agreement, or conduct bringing the employer into disrepute would, I suspect, be as impactful and as frowned upon in many other settings as much as in a hospital.

[27] Second, there is no evidence in the record before me to attest to this claim of heightened importance and sensitivity. And while I can imagine those considerations applying to certain aspects of a hospital’s operations such as patient care in particular, I would need evidence to be persuaded that it would necessarily be true for someone like the plaintiff, who was primarily involved in discussions and bargaining with a union.

[28] As set out above, assuming for purposes of argument that at least some of the scenarios enumerated in the “for cause” section would, on their individual faces, violate the ESA, the hospital’s response is to point to the “At all times…” language following the “without cause” section of the Termination Clause.

[29] While again Mr. Khan’s argument was skillful, in my view this language, appearing as it does in a Termination Clause that includes scenarios that on their face violate the ESA, must be considered as purported “saving” or “failsafe” language. The defendant further resists this categorization, arguing that in all other instances in which “saving” language is included and considered, it is where there has been an acknowledgement in the language of the relevant termination provisions themselves that there may, in some clause or another, have been an inadvertent breach of the ESA. For example, in the Court of Appeal’s decision in Rossman v. Canadian Solar Inc., 2019 ONCA 992, 444 D.L.R. (4th) 131, the “saving” provision said:

In the event the minimum statutory requirements as at the date of termination provide for any greater right or benefit than that provided in this agreement, such statutory requirements will replace the notice or payments in lieu of notice contemplated under this agreement.

[30] The defendant argues that by explicitly acknowledging the possibility of a termination provision failing to meet a statutory minimum, the Rossman employment agreement in effect concedes that a separate “saving” clause is necessary to guard against that possibility. The defendant says that its clause does not allow for or acknowledge that possibility and, rather, ensures that this will never happen by confirming, in language that must be read as part of the whole clause, that “At all times” the employer will comply with the ESA.

[31] To test the limits of the proposition, I put to defendant’s counsel, the “saving” language from the Perretta case. In that case the termination for cause provision stated that it was “subject to the ESA” and further provided that: “If your minimum entitlements upon termination pursuant to the ESA exceed that which is set out above, your minimum entitlements under the ESA will govern.”

[32] Counsel for the defendant candidly acknowledged that the language stating that the termination provisions were “subject to the ESA” was a more general statement that might be understood as being closer to the language at issue in this case. Nevertheless, he maintained that confirming that termination for cause provisions are subject to the ESA is not as clear as the clarifying “At all times” language in the Employment Agreement at issue here.

Conclusion re: “Clarifying” or “Saving” Language

[33] In my view, this is effectively a distinction without a difference. If there are “for cause” provisions (or any provisions) within the Termination Clause that violate the ESA, then Rossman, Perretta, and various additional cases hold that, whether or not the “saving” or “clarifying” language acknowledges a possible breach or not, its effect is the same. All such language in these agreements must also be considered in light of the Court of Appeal’s observations and guidance in Wood v. Fred Deeley Imports Ltd., 2017 ONCA 158, 134 O.R. (3d) 481, as adopted and further applied in Rossman. As Laskin J.A. said in Wood, at para. 28 (applied in Rossman, at para. 23), in application of these principles, the Termination With Cause Provision must be interpreted in a way that “encourages employers to comply with the minimum requirements of the ESA”, that “encourages employers to draft agreements that comply with the ESA”, and that allows employees to “know at the beginning of their employment what their entitlement will be at the end of their employment.” Any ambiguity in a termination clause must be interpreted in a manner that gives the greater benefit to the employee.

[34] Implicit in that guidance, and brought to bear in the numerous cases that have refused to enforce termination clauses that contain any provision that violates the ESA, is the notion that, given the power and knowledge imbalance between employers and employees, there is a risk that an employer might “slip in” to an employment agreement a provision or provisions known to be beyond the narrow parameters of O. Reg. 288/01 of the ESA. That employer might hope or even expect that the employee will not be aware of the contents of that regulation. As others have noted, the mischief of a “saving” clause is that in the face of such a clause an employee might conclude that the offending provisions must be in keeping with the ESA requirements.

[35] The defendant argues that its “At all times” language would not mislead an employee in this way and would rather reassure the employee that, no matter what, ESA entitlements will be met.

[36] I do not accept that an employee would be any more comforted by non‑specific assurances that ESA standards will be met than by slightly more specific assurances that if any ESA standards are not met in the clauses they will be met in the event. I also do not agree that general “At all times” language has any less potential to mislead an employee into thinking that all of the “for cause” provisions must be in keeping with ESA requirements.

[37] I think that in each case the problem is that the termination clause contains provisions that violate the ESA and thereby offend the guiding principles articulated by Laskin J. A. in Wood, and repeated and applied in Rossman and elsewhere since that decision.

[38] So, whether as “saving” or “clarifying”, I do not accept that the “At all times” language, coupled as it is with provisions breaching the ESA, renders those offending provisions acceptable.

[39] Apart from the purported insistence on the language being “clarifying” as opposed to “saving”, the hospital also seeks to rely on the Court of Appeal’s decision in Amberber v. IBM Canada Ltd., 2018 ONCA 571, 424 D.L.R. (4th) 169.

[40] I do not think that the Amberber decision assists the defendant. In Amberber the “saving” provision – referred to as a “failsafe” provision – was upheld and the plaintiff was given ESA termination payments. The plaintiff was awarded ESA termination pay only, despite his argument that any ambiguity about whether or not common law damages in lieu of notice were ousted by his employment contract should be resolved in his favour. The termination clause in question, which included the “failsafe” language at its conclusion, was effectively a formula for how termination pay would be calculated. Unlike the Employment Agreement in this case, it did not contain provisions that violated the ESA.

[41] Likewise, in Nemeth v. Hatch Ltd., 2018 ONCA 7, 418 D.L.R. (4th) 542, on which the defendant also relies, the issue was alleged ambiguity about whether or not common law damages were available. Again, there was no language offending the ESA.

Discussion of Recent Decision in Rahman v. Cannon Design

[42] Subsequent to the argument of the motion, counsel advised me that Justice Dunphy had released a decision in Rahman v. Cannon Design Architecture Inc., 2021 ONSC 5961. Defendant’s counsel submitted that this decision should factor into my analysis in the case before me. I asked counsel to provide me with supplementary submissions concerning the potential effect of Rahman.

[43] Having read the Rahman decision, and counsel’s further submissions, I find that my analysis does not change.

[44] As discussed above, in this case, like Perretta and unlike Rahman, the Employment Agreement lists a number of scenarios in which the defendant would withhold termination entitlements, several of which on their face go beyond the ESA threshold.

[45] The fundamental determination, in my view, is whether or not the clause or clauses in issue violate the ESA. If it does, then the clause(s) is void, and cannot be used as evidence of the parties’ intention.

[46] It is also problematic, in my opinion, to engage in a detailed analysis about the level of sophistication of an employee and whether or not they had time and opportunity to obtain legal advice. A termination clause cannot comply with the ESA for some employees but violate the ESA for others. It either violates the ESA or does not, and it either enforceable or not. It is a straightforward matter for an employer to incorporate clauses in an employment agreement that comply with ESA standards, and when that is not done the court should not be asked to rewrite the language of the termination provisions to achieve compliance.

Overall Conclusion on Liability

[47] In summary, then, with respect to the main liability issues, I find that various provisions within the “with cause” section of the Termination Clause in the Employment Agreement violate the ESA. I find that these breaches are not “clarified” nor “saved” by the “At all times…” language on which the defendant relies and that, therefore, the plaintiff is entitled to damages in lieu of notice beyond the termination payment she received.

Notice

[48] That leaves the question of the appropriate notice period.

[49] Both parties agree that in determining the notice period the court should look to the framework developed in Bardal v. The Globe & Mail Ltd. (1960), 1960 CanLII 294 (ON SC), 24 D.L.R. (2d) 140 (Ont. H.C.).

Plaintiff’s Position on Notice

[50] The plaintiff notes, relying on Bardal, that the factors to be applied are flexible, and that short-service employees like the plaintiff (who worked for the defendant for 19 months) do not necessarily receive shorter periods simply by virtue of their short service. The plaintiff says the fact that she is relatively older (she was 61 at the time of termination), and the stigma attached to shorter service employees when seeking new employment are factors justifying an increased notice period.

[51] She also says that the court must also consider the economic climate into which the employee is placed when terminated, which the plaintiff says is particularly relevant amidst the COVID-19 pandemic.

[52] Finally, the plaintiff relies on the Court of Appeal’s decision in Di Tomaso v. Crown Metal Packaging Canada LP, 2011 ONCA 469, 337 D.L.R. (4th) 679, for the proposition that the character of the employment is of declining relative importance, particularly when used to assert that lower level or non-managerial employees deserve less notice because they have an easier time finding alternative employment.

[53] Taking all of these factors into account, and pointing to what she suggests are comparable cases, the plaintiff maintains that the right period is 6 months (acknowledging that she actually found new employment after 5 months and 20 days).

Defendant’s Position on Notice

[54] The defendant argues that the right notice period is instead in the range of 1 to 1.5 months.

[55] It argues that the plaintiff’s position, while a senior position requiring her to represent the hospital in labour relations, also carried no supervisory or management responsibilities.

[56] It also notes that all of the evidence shows an abundance of employment opportunities in the plaintiff’s field of labour relations, including the 85 or so jobs for which the plaintiff applied following her termination (before in fact landing a new job).

[57] The defendant also points to cases which it maintains are analogous, and in which notice periods of 1 to 2.5 months were awarded.

Conclusion re: Notice

[58] While applying the Bardal factors is as much art as science, I find that the reasonable notice period here is 4.5 months.

[59] The plaintiff’s age, and the relative seniority and responsibility of her position with the defendant are factors tending to increase the notice to which she is entitled.

[60] On the other hand, it is clear that, fortunately for the plaintiff, one consequence of the pandemic appears to be that there are numerous opportunities available for those, like the plaintiff, qualified in the labour relations area.

[61] Her ability to identify and apply to 85 potential positions and her ability to secure alternative employment relatively quickly attest to the opportunities in her field such that the potential stigma of losing her position with the defendant after a relatively short stint, or other potentially problematic factors such as being relatively older, do not appear to have played a significant role in this case.

[62] It is also true that, despite the seniority and responsibility of her position with the defendant, the plaintiff had no particular supervisory or managerial duties.

[63] Taking these various factors into account, I have arrived at the notice of 4.5 months.

[64] The parties have advised me that once I have determined the appropriate notice period, they are able to agree on the plaintiff’s other entitlements (in terms of benefits, vacation pay).

[65] Given her success and the fact that I have found the defendant’s Termination Clause unenforceable, the plaintiff is entitled to her costs.

[66] If the parties are unable to agree on costs, the plaintiff may provide a brief (2-page) submission, together with a bill of costs, within 10 days of the date of this decision (November 4, 2021). The defendant may provide an equally brief submission within 7 days thereafter (November 11, 2021)

W.D Black J.

Date: October 25, 2021