Worker argued someone without legal training might misunderstand entitlements
The Ontario Court of Appeal has upheld a lower court’s ruling that the termination provision in a worker’s employment contract complied with provincial employment standards legislation and successfully contracted out of common law damages.
The worker was a vice-president of Datastealth, a software company in Mississauga, Ont. Datastealth hired him with an employment contract that included a termination clause stating that “if your employment is terminated with or without cause,” he would receive only the statutory minimum payments and entitlements required under the Ontario Employment Standards Act, 2000 (ESA), including notice or termination pay, severance pay where applicable, and benefits continuation.
The clause also stated that compliance with ESA minimums would satisfy any contractual or common law entitlement and “there are circumstances in which you would have no entitlement to notice of termination, termination pay, severance pay or benefit continuation.”
Additionally, the employment agreement included a clause stipulating that if any entitlements were less than ESA minimums, the worker would receive the statutory minimums instead.
Datastealth terminated the worker’s employment after he had been with the company for eight-and-a-half months, providing him with four weeks’ pay in lieu of notice. The statutory minimum under the ESA for the worker’s service time was three weeks.
Wrongful dismissal action
The worker sued for wrongful dismissal, claiming that the termination clause was unenforceable and he was entitled to 12 months’ common law notice. He argued that the clause was ambiguous and could allow Datastealth to terminate his employment for cause that fell short of “willful misconduct, disobedience or willful neglect of duty” without any notice or termination pay. Under the ESA regulation, the “willful misconduct” standard is the only circumstance when notice or termination pay doesn’t have to be provided by the employer.
Datastealth filed a motion seeking an interpretation of the termination clause and a dismissal of the worker’s action on the grounds that it disclosed no tenable cause.
The motion judge sided with Datastealth, finding that the termination clause was enforceable and not in violation of the ESA. There was “no reasonable interpretation” of the clause that excluded the ESA’s minimum requirements, the motion judge said. In addition, the “failsafe” clause that expressly provided for minimum ESA entitlements in the event the termination clause fell short than the statutory minimums wasn’t necessary because the termination clause was clear and unambiguous, said the motion judge in dismissing the worker’s wrongful dismissal action.
The worker appealed the motion judge’s decision, maintaining that the termination clause was ambiguous and could lead an employee without legal training into believing that they could be dismissed for less than the “willful misconduct” standard, such as negligence, without notice or pay in lieu.
Clear, unambiguous termination clause
However, the Court of Appeal agreed with the motion judge that there was no ambiguity in the termination clause. It referred to its own 2018 decision in Amberber v. IBM Canada Ltd., 2018 ONCA 571, which established that while a clause with multiple interpretations should be interpreted in favour of the employee, ambiguity requires more than just the existence of competing interpretations if such interpretations are reasonable.
The appeal court found that the termination clause specifically stated that the worker would receive the minimum statutory entitlements regardless of whether he was terminated “with or without cause.” A reasonable interpretation by an average employee without legal training would take this to mean that they would receive the ESA minimum entitlements for any termination short of the “willful misconduct” standard, said the Court of Appeal in finding no error in the motion judge’s decision that the termination clause was enforceable.
The court dismissed the worker’s appeal and ordered him to pay costs of $10,000 to Datastealth. See Bertsch v. Datastealth Inc., 2025 ONCA 379.
