A former decor store manager at Arista Homes has been awarded eight months’ notice after the Ontario Superior Court of Justice ruled she had been wrongfully dismissed from her job.
At the heart of the dispute was the written employment contract, which the defendant argued limited the worker’s termination entitlements to statutory severance pay only.
However, the court found the termination provisions unenforceable, citing the fact they provided less than the statutory minimum requirements.
Termination provisions in employment contract
Here’s what the contract stated:
If you are terminated for Cause or you have been guilty of wilful misconduct, disobedience, breach of Employment Agreement or wilful neglect of duty that is not trivial and has not been condoned by ARISTA, then ARISTA will be under no further obligation to provide you with pay in lieu of reasonable notice or severance pay whether under statute or common law. For the purposes of this Agreement “Cause” shall include your involvement in any act or omission which would in law permit ARISTA to, without notice or payment in lieu of notice, terminate your employment. (Emphasis added)
The court noted that items in bold above contain provisions that go “beyond the limited circumstances” in which Regulation 288/01 of the Employment Standards Act authorizes termination without notice. That section states that the following employees are not entitled to notice: “An employee who has been guilty of wilful misconduct, disobedience or wilful neglect of duty that is not trivial and has not been condoned by the employer.”
Citing Waksdale
The Court underscored the significance of the Ontario Court of Appeal’s decision in Waksdale v. Swegon North America Inc., stating, “if an employment contract contains a termination provision that is contrary to the minimum standards in the ESA, then all termination provisions in the contract are unenforceable.”
The defendant’s assertion of the plaintiff’s failure to mitigate her damages was also dismissed by the court. The Court highlighted the absence of evidence from the Arista Homes to prove the plaintiff did not take reasonable steps to find new employment, noting, “The defendant has put forward no evidence in this regard.”
Calculating the notice period
At the time of termination, the decor store manager had been in her job for about five years and was 49 years old. She had an annual salary of $80,000, plus an annual bonus of about $5,000. She had wide-ranging managerial duties, including hiring staff with the approval of a VP and the president, training on work duties, arranging training seminars, and general oversight of day-to-day operations.
She sought eight months’ notice and the employer made no submission with respect to the appropriate notice period.
The court determined the plaintiff was entitled to an 8-month notice period, plus compensation for lost benefits (calculated at 10 per cent of her wages) and a prorated annual bonus, totaling $57,620.85.
This decision came after considering the plaintiff’s age, length of service, and the specific nature of her employment, as well as the broader context of the COVID-19 pandemic’s impact on the job market.
It asked both sides to make submissions on costs.
For more information, see De Castro v. Arista Homes Limited, 2024 ONSC 1035 (CanLII).
