In Dufault v Ignace (Township), 2024 ONCA 915, the Ontario Court of Appeal dismissed an appeal by an employer, upholding the lower court decision that the termination clause contained in the relevant employee’s employment contract was unenforceable.
Although Dufault is not an Alberta case, any case hailing from a provincial Court of Appeal is important and persuasive authority the other provinces, including Alberta. The potential meaning of this case in Alberta is discussed in “My Take” later in this post.
Facts
The following were some of the pertinent facts:
- This was a wrongful dismissal case where the plaintiff employee Karen Dufault had been terminated from employment without cause
- Dufault had been awarded severance pay at trial
- There was a termination clause in Ms. Dufault’s employment contract with the employer. The employer argued at trial that the clause prevented Ms. Dufault from being entitled to common law reasonable notice (severance pay), but the employee successfully argued that the termination clauses were unenforceable for attempting to contract out of the minimum standards set by the employment standards legislation
- The employer appealed to the Court of Appeal, and this is a summary and commentary of that decision.
Analysis / Conclusion
The Court of Appeal determined that the relevant clause purported to allow the employer to terminate the responded for “cause” without notice (severance), but the clause defined “cause” more broadly than what is considered just cause for dismissal under the Ontario Employment Standards legislation. If the clause were enforceable, it would allow the employer to pay no statutory severance even when the employee misconduct or performance was not bad enough to constitute “cause” under the legislation.
The Court of Appeal went on to uphold the finding that the termination clauses on the whole were rendered unenforceable by the offending clause, as follows:
[23] In Waksdale, this court held that the termination provisions in an employment contract must be read as a whole. If one termination provision in an employment contract violates the ESA minimum standards, all termination provisions in the contract are invalid […].
My Take
It will be interesting to see how the Waksdale and Dufault line of authority are treated in Alberta. So far there appears to be very little or no treatment of these decisions in Alberta.
There are some important distinctions between Ontario and Alberta employment standards legislation that could affect how this line of authority ends up being treated here. The clearest and most pertinent distinction is that the Ontario legislation actually defines “employee misconduct” in a manner that is narrower than “just cause” at common law, whereas the Alberta employment standards legislation does not define misconduct or just cause, and in Alberta, the cases considering what “just cause” is under our employment standards legislation have tended to interpret it using the common law caselaw. In other words, in Ontario there are 2 clearly different standards for dismissal without notice (legislation vs common law), but Alberta there might only be 1 standard for dismissal without notice.
The significance of the above distinction is that in Alberta, if a clause stated that termination without notice was allowed for something “constituting just cause at common law”, an employer would have a decent argument that the clause should be upheld as reasonable, even on the reasoning from Waksdale and Dufault.
I would point out though: I am not saying here I think there is no argument for invalidating a termination clause in Alberta on the basis of this line of authority. For instance, if a clause purported to allow termination for cause (without notice) for something which would not normally constitute cause at common law, this overreach could presumably be used to invalidate the whole raft of termination clauses in the contract on the basis of Waksdale / Dufault.
There are other novel arguments that could spring from this line of authority, but we’ll save those for another day.
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