A recent decision of the Ontario Superior Court, Campbell-Givons v. Humber River Hospital, like many others over the past year, involved an employee who had been fired pursuant to a “just cause” termination provision. As we have seen, employment contracts that allow for the termination of employees for “just cause” have frequently been found unenforceable (although not always) for violating the Employment Standards Act, which requires a higher standard of misconduct on behalf of an employee than the “just cause” standard implies.
Notably, this case considers the effect of a saving clause on the enforceability of “just cause” termination provisions, and provides further comment on whether or not courts should consider the sophistication of the parties in determining if an otherwise invalid termination provision should be enforced nonetheless.
The employee in this case was 61 years old at the time of her termination. She worked as a Senior Labour Relations Specialist at a Toronto public hospital – a position she held for only 19 months. Upon termination, the employer paid the employee three weeks’ pay in lieu of notice, which was all they owed under the employment contract. However, there was one major problem for the employer: the termination provision they relied on addressed both termination “for cause” and termination “without cause.”
“Just Cause” Termination Provision
In the employee’s view, the “for cause” portion of the termination provision violated the Employment Standards Act. The case law is clear that the circumstances in which employers are able to terminate employees without notice under the ESA are much narrower than the common law standard of just cause would permit. Under the common law standard, a wide range of employee misconduct may disentitle them from reasonable notice under common law, but the same conduct would not be sufficient to deprive them of their entitlements under the ESA. That is essentially what makes “just cause” termination provisions contrary to law.
The Ontario Court of Appeal has also held that where termination provisions are found to be illegal, for example because they permit summary dismissal for “just cause”, such an illegal provision cannot be excised from the overall termination clause. For that reason, if the “with cause” provision is illegal, so is the “without cause” provision. In effect, the entire termination clause becomes unenforceable.
Ultimately, the Court found that the employee was right: the termination provision did indeed violate the ESA.
The “Saving” Provision?
In this case, the employer attempted to save their termination clause from being found unenforceable by pointing to the following language contained within:
The Court was not persuaded. In their view, saving clauses such as this present a worrisome danger: that employers may draft termination provisions they know to be unenforceable, expecting that dismissed employees will accept them as so, and then protecting themselves with a saving clause in the event an employee actually challenges the termination provision. Courts do not want to allow employers to mislead employees, and that appears to be the practical effect of saving clauses. Ultimately, the Court found the termination provision unenforceable, and held that the “saving” clause had no effect on that determination.
Recent jurisprudence has considered whether or not the sophistication of employees should be taken into account when determining the enforceability of termination provisions. We have discussed this in an earlier blog post. On this point, the Court here commented: