|
Employment - Contracts - Interpretation. Dufault v. Ignace (Township)
In Dufault v. Ignace (Township) (Ont CA, 2024) the Ontario Court of Appeal dismissed a municipality's wrongful dismissal appeal, here where the action was heard by summary judgment and grounded without cause. The central issue was the extent of the employment contract-voiding effect of it's ESA-breaching provisions (Waksdale).
Here the court considers the interpretation of employment contracts:[12] Laskin J.A. summarized the law regarding the interpretation of employment contracts in Woods, at paras. 28, 44-51. Three points are of particular importance for this appeal. First, the ESA is remedial legislation, intended to protect the interests of employees. As a result, courts should favour an interpretation of the ESA that encourages employers to comply with its minimum standards over an interpretation that does not do so.
[13] Second, termination clauses should be interpreted in a way that encourages employers to draft agreements that comply with the ESA. If the only consequence for an employer of drafting a termination clause that does not comply with ESA minimum standards is an order that they comply, employers will have little incentive to draft a lawful termination clause at the start of the employment relationship.
[14] Third, the interpretation of a termination clause and whether it meets the minimum standards set out in the ESA is based on the wording of the clause. Thus, even if the employer complies with the ESA minimum standards at the time of termination, that compliance does not have the effect of remedying a termination provision that does not comply with the ESA minimum standards in a contract entered into at the beginning of the employment. . De Castro v. Arista Homes Limited
In De Castro v. Arista Homes Limited (Ont CA, 2025) the Ontario Court of Appeal dismissed an employer's appeal of a successful wrongful dismissal case.
Here the court considered interpretation of employment contracts:[14] Finally, the motion judge’s approach reflects a careful application of established principles governing the interpretation of employment contracts. Courts have recognized that such contracts are generally interpreted differently than other commercial agreements to protect the interests of employees: see Wood v. Fred Deeley Imports Ltd., 2017 ONCA 158, 412 D.L.R. (4th) 261, at paras. 26-28. Employees have less bargaining power than employers. Furthermore, employees are far less likely than employers to be familiar with the standards dictated by the ESA.
[15] Because the ESA is “remedial legislation, intended to protect the interests of employees”, courts are to adopt an interpretation that best achieves this objective: Wood, at para. 28. That means an interpretation that “encourages employers to comply with the minimum requirements of the Act” and “extends its protections to as many employees as possible”: Machtinger v. HOJ Industries Ltd., 1992 CanLII 102 (SCC), [1992] 1 S.C.R. 986, at p. 1003. The contract is to be read as a whole, with any ambiguity construed in favour of the employee. . Bertsch v. Datastealth Inc.
In Bertsch v. Datastealth Inc. (Ont CA, 2025) the Ontario Court of Appeal dismissed an appeal, here from the "dismissal of the appellant’s wrongful dismissal action".
The court considers contract interpretation in the employment context, here favouring the employee:[8] The appellant submitted that the motion judge erred when he refused to find that the termination clause was ambiguous. He asserted that, while a person trained in the law might find the clause unambiguous, an ordinary person might understand, incorrectly, that they could be terminated from their employment without notice for conduct such as negligence.
[9] We see no error in the motion judge’s disposition of the r. 21 motion. In Amberber v. IBM Canada Ltd., 2018 ONCA 571, 424 D.L.R. (4th) 169, this court observed, at para. 43, that “[w]here a termination clause can reasonably be interpreted in more than one way, the interpretation that favours the employee should be preferred”. A finding of ambiguity, however, means “something more than the mere existence of competing interpretations”: Amberber, at para. 45.
[10] Contrary to the appellant’s submissions, this is not a case where the agreement uses legal terms or language that might be confusing to a person not versed in the law. The appellant’s counsel suggests that because the average employee may believe that a person can be terminated for cause without notice, they could read the termination agreement to provide for termination for cause for any reason without payment. Such a reading would require the employee to ignore the words “with or without cause”.
[11] In any event, the issue is not whether an ordinary person might arrive at an incorrect interpretation of the termination provisions of the employment agreement, but how the agreement can be reasonably interpreted. The termination provision specifically states that an employee who is terminated “with or without cause” will receive the minimum payments and entitlements under the ESA and its regulations. We see no error in the motion judge’s conclusion that the termination provision in the employment agreement is unambiguous, and that, when reasonably interpreted, it does not depart from the minimum standards guaranteed by the ESA. As such, the termination provision is enforceable and precludes the appellant’s claim for common law damages for wrongful dismissal. . Oz Optics Limited v. Summers
In Oz Optics Limited v. Summers (Div Court, 2023) the Divisional Court considers the interpretation of employment contracts:Interpretation of Employment Contracts
[15] The Court of Appeal has stressed that employment contracts should be interpreted differently from other commercial agreements. The court included the following as considerations in that exercise:(a) Many employees are likely unfamiliar with employment standards in the ESA and the obligations the statute imposes on employers.
(b) The ESA is remedial legislation intended to protect the interests of employees. Courts should therefore favour an interpretation of the legislation that encourages employers to comply with the minimum standards of the Act.
(c) Termination clauses should be interpreted in a way that encourages employers to draft agreements which comply with the ESA.
(d) Faced with a termination clause that could be reasonably be interpreted in more than one way, courts should prefer the interpretation that gives the greater benefit to the employee. See Wood v. Fred Deeley Imports Ltd., 2017 ONCA 158, 134 O.R. (3d) 48, at para. 28.
|
