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Digest of the Week | Effect of contractual terms regarding notice

Motion judge found termination clause unenforceable, Court of Appeal found that motion judge should have interpreted whole clause, rather than each sentence


Amberber v. IBM Canada Ltd. | 2018 ONCA 571 | Ontario Court of Appeal


Labour and employment law --- Employment law — Termination and dismissal — Notice — Effect of contractual terms regarding notice



Employee's employment was governed by contract containing termination clause which provided, among other things, that, in event of termination without cause, employer would provide employee with notice or payment in lieu of notice that would include any and all termination notice pay and severance payments under provincial employment standards legislation and common law and that, in event applicable provincial employment standard legislation provided superior entitlements, employer was to provide employee with statutory entitlements in substitution for rights under contract — Employer terminated employee without cause — Employee brought action for wrongful dismissal — Employer brought motion for summary judgment on basis action was precluded by termination clause — Motion judge dismissed motion, holding that termination clause was ambiguous and unenforceable as it did not clearly set out intention to deprive employee of common law damages — Motion judge interpreted termination clause as falling into three parts, being options provision, inclusive payment provision, and failsafe provision and held that employer could easily have drafted termination clause that clearly excluded common law notice entitlement in both options provision scenario and failsafe provision scenario but instead drafted clause that was ambiguous and was not clear as to whether exclusion of common law notice entitlement applied to failsafe provision scenario — Employer appealed — Appeal allowed; action dismissed — Motion judge erred in subdividing termination clause into what she regarded as its constituent parts and interpreting them individually when each sentence could not be interpreted on its own — When interpreted properly as whole, there was no doubt as to clause's meaning — To extent motion judge relied on placement of inclusive payment provision within clause, she erred — By holding that placement of inclusive payment provision between options provision and failsafe provision meant it only applied to options provision, motion judge gave clause as whole strained and unreasonable interpretation — Failsafe provision modified options provision and ensured it was read up so that it complied with Employment Standards Act, 2000 — Motion judge strained to create ambiguity where there was none, failed to apply well-established principles of construction, and deviated significantly from text of clause — Motion judge committed extricable errors of law that were reviewable on correctness standard.
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