In Timmins v. Artisan Cells, the Ontario Superior Court briefly considered an argument that the employment contract breached Ontario’s Employment Standards Act. The employment contract stipulated that any dispute or claim related to any dispute under the contract could only be resolved under the exclusive jurisdiction of the courts of Ontario. It was argued that this clause ousted the ability of the employee to file a complaint with the Ministry of Labour under s. 96(1) of the ESA, hence breached the legislation. This argument was presented as a novel breach of the ESA, and further, that any employment contracts which breach the ESA are void. Additionally, it was argued that the termination provisions also breached the ESA. Despite the arguments presented at trial, the Court determined that it was not in a position to resolve the issue because the employer had not appeared at court and hence could not present any opposing account of the situation. Further, the Court determined that the matter could be fully determined by addressing other issues. Consequently, the Court decided to shelf the proposed novel breach for lack of full argument by both parties.
Repudiation of the Employment Contract
Given the Court’s decision that the novel breach of the Employment Standards Act would be better addressed with full argument, the Court turned to consider the argument of repudiation of the employment contract. To establish repudiation of a contract, the Court indicated there must be an investigation into the nature of the contract, the attendant circumstances, and the motives which prompted the breach. In this case, the contract specified that the employee was entitled to the greater of either a) minimum notice under the ESA or b) 3 months’ notice or pay in lieu thereof. Ultimately, the employee was not provided with the amount of notice as specified in the contract. Instead, he only received notice for one week and was told he would not receive anything more unless he signed a broad full and final release, which included a release for any other claim, and non-disclosure and non-disparagement clauses. There was no explanation given by the employer as to why the employee did not receive his contractual entitlements to notice. The Court found it was clear the only motivation for withholding the remaining notice payments was to secure the release. Consequently, the Court determined that by failing to comply with the terms of the termination provisions, the employer repudiated the employment contract.
Given the employment contract was repudiated, the employee was entitled to common law notice of dismissal, which in this case proved to be significantly more expansive than his contractual entitlements. The Court conducted a full analysis of entitlement to notice at common law, assessing the employee as being 44 years old, having been employed for three-and-a-half years, at a Vice President position, and earning over $475,000 per year. The Court determined that the employee was entitled to a 9-month notice period.
Citing the Supreme Court, the Judge indicated that the employee was entitled to all amounts that he would have earned during the notice period, including salary, benefits, and bonuses. In this case, there was a clause in the bonus agreement which stated that an employee needed to be actively employed” to receive the bonus. However, the Court determined this clause was sufficiently ambiguous, and did not properly exclude the bonus from the notice period. Consequently, the employee was entitled to receive his bonus.
Common Employer Doctrine
Another element to this case was that the employee sought to have two entities classified as common employers, hence both would be liable for the damages owed to him. The Court noted that the significant factor is effective control over the employee, though this must be weighed with other factors like the written employment contract. Control over matters like payment of wages and other compensation, method of work, and ability to hire and fire, can all be important elements of showing that degree of control is necessary. Ultimately, the question is an objective one, whereby the parties acted in such a way that they intended to be parties to the employment contract.
In the present case, the employer had two entities, ADL and ACL, but ACL was created after the employee was formally employed. Nevertheless, the corporate entities acted in concert, orders were given to the employee by both entities without distinction, and the employee was treated as though he worked for both entities. Even on his termination letter, despite being hired by ADL, he was terminated by ACL. Consequently, the court found that the common employer doctrine had been satisfied, and that both ADL and ACL were jointly responsible for damages to the employee.