Post-Waksdale: Importance of Employment Contract Review

Post-Waksdale: Importance of Employment Contract Review

In the aftermath of Wakedale, it has become more important than ever for employers to get their contracts reviewed by a qualified employment lawyer to determine if they are at risk of being invalidated. Recently, in Dufault v The Corporation of the Township of Ignace, 2024 ONSC 1029, the Ontario Superior Court has further widened the scope of invalid termination clauses in the post-Waksdale era.

In Dufault, the court ruled that a termination clause was invalid for the following reasons:

  1. It allowed the Employer to terminate the agreement without notice on a for cause basis, which included “the failure of the Employee to perform the services as hereinbefore specified”, which was interpreted in line with Waksdale to substitute a lower standard of cause than that found in the ESA.
  2. It gave the Employer sole discretion to terminate the employment agreement at any time upon provision of certain notice entitlements. The court determined that this could allow the Employer to terminate the employee after reinstatement following a protected leave (in breach of section 53 of the ESA) or in reprisal (in breach of section 74 of the ESA).
  3. It specified that the Employer could dismiss the Employee without cause upon the provision of “the employee’s base salary for two weeks per year of service”. The court held that base salary is different from “Regular Wages”, which are required to be provided during any period or pay in lieu of notice under the ESA.
  4. It specified that the above-noted payment would be made in bi-weekly installments in violation of section 61(1) of the ESA, which requires any pay in lieu of notice to be paid in lump-sum.

The result of this finding was that the Plaintiff was entitled to common law relief. While normally this would be common law reasonable notice, in this particular case it was payment for the entirety of the remainder of the Plaintiff’s fixed-term agreement.

How Can Whitten & Lublin Help?

Each of these four grounds of invalidation represent a vulnerability common to many existing termination clauses, which in the post-Waksdale era have been re-evaluated for such potential breaches, as a breach in any provision relating to termination can invalidate all termination-related provisions.

Employers should consult with an experienced employment lawyer to review both new and existing contracts, to ensure the language is valid and can withstand a Waksdale­-style challenge, as a large number of existing employment contracts are likely vulnerable to invalidation on these ever-expanding grounds.  To learn more about how this impacts your business, contact Whitten & Lublin. We would be happy to assist you. Contact us online or phone 416 640-2667.

Author – Aaron Zaltzman