In Miller v A.B.M. Canada Inc (“Miller”), the Ontario Superior Court of Justice Divisional Court affirmed an earlier decision from the lower court, in the process providing key insight into how the courts will interpret termination provisions in written employment contracts. On March 19, 2015, Associate Chief Justice Marrocco upheld the trial judge’s reasoning and dismissed the appeal by the former employer, A.B.M. Canada Inc. In the reasons for judgment, the Divisional Court affirmed the original conclusion that the termination clause in question was null and void because it provided lesser benefits than those provided for in the Ontario Employment Standards Act, 2000 (“ESA”), despite the fact that the clause adequately considered the minimum notice period. The decision in Miller therefore underscores the importance of including all forms of remuneration in a termination clause, including benefits. If employers fail to do so they run the risk of having the termination clause declared unenforceable.
The decision also emphasizes that any ambiguity in contract clauses will likely be interpreted in favour of the employee. As such, the case stands as a warning to all employers, including charities and not-for-profits, about the importance of ensuring that termination clauses in employment contracts do not undercut the ESA minimum provisions. If such clauses do not reflect ESA minimum requirements, common law notice periods will apply. This Charity Law Bulletin summarizes the comments from both court decisions in Miller.
Ambiguous Termination Provision Deemed Unenforceable
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