You make the call
This edition of You Make the Call features a dispute over a termination clause for a general manager at an Ontario fitness centre.
Catherine Bergeron, 39, was hired on Aug. 4, 2015, by Movati Athletic Group to be the general manager of Movati’s fitness facility in Orleans, Ont. Movati operates 13 health and fitness facilities across Ontario.
At the time of hiring, Movati provided her with two agreements to sign — an employment agreement and a “noncompete, nonsolicitation, confidentiality and invention agreement." The former included a termination clause that allowed Movati to terminate Bergeron’s employment without cause at any time “upon providing you with notice or pay in lieu of notice, and severance, if applicable, pursuant to the Employment Standards Act, 2000 and subject to the continuation of your group benefits coverage, if applicable, for the minimum period required by the Employment Standards Act, 2000, as amended from time to time.
The non-competition agreement restricted Bergeron from seeking employment with another company in the fitness field for six months after termination of her employment with Movati.
As a general manager, Bergeron supervised 90 full- and part-time employees and received an annual incentive bonus of up to 20 per cent of her base salary to a maximum of $18,000.
On Dec. 5, 2016, Movati terminated Bergeron’s employment. The company meant to pay her two weeks’ pay in lieu of notice, as stipulated under the ESA for 16 months’ service, but an error led to Bergeron receiving four weeks’ pay. She still received two weeks of benefits coverage and outstanding vacation pay.
Bergeron found another job as a mortgage representative on Jan. 1, 2017, and Movati waived the non-competition agreement. However, Bergeron filed a claim for wrongful dismissal, claiming the termination provision in her employment agreement wasn’t enforceable and it wasn’t her intention to waive her common-law notice entitlement when she signed the agreement.
You Make the Call
Was the employee entitled to more pay in lieu of notice?
OR
Did the employment agreement restrict notice to employment standards minimums?
If you said Bergeron was entitled to more pay in lieu of notice, you’re right. The court found that while Bergeron hired and fired employees on behalf of Movati, she may not have been aware of the consequences of her termination clause when she signed her employment agreement and she was in a weaker negotiating position than Movati at the time. As a result, the termination clause must have “a high degree of clarity” to ensure both parties’ intentions were the same.
However, the termination clause wasn’t clear and presented ambiguity, said the court. It allowed for termination with notice or pay in lieu of notice "pursuant" to the Employment Standards Act, but nowhere did it limit notice or pay in lieu thereof to just the act’s minimums. A few well-placed words would have changed that, but the agreement lacked those, and, as a result, Bergeron was entitled to common law notice, said the court.
“The use of the term ‘only’ would clearly indicate to the prospective employee that she would only be entitled to a notice period as per the (Employment Standards Act),” the court said. “Based on the reason above, I find that Movati cannot rely on the termination clause in Ms. Bergeron’s employment agreement to contract out of its obligations under the common law.
The court found that Bergeron was relatively young and lacked formal post-secondary qualifications for similar senior managerial roles, but her experience with Movati and previous similar managerial positions showed her education hadn’t hampered her ability to find such positions. In addition, Movati waived the non-competition agreement and Bergeron found work within one month, so the court determined three months was an appropriate notice period.
In addition to the three months’ pay in lieu of notice, Movati was ordered to pay Bergeron more than $15,000 for her 2016 bonus and the prorated amount of her 2017 bonus to the end of her notice period in early March 2017.
For more information see:
• Bergeron v. Movati Athletic (Group) Inc., 2018 CarswellOnt 1659 (Ont. S.C.J.).
