Canadian Lawyer

November 2021

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Page 29 of 43

28 EMPLOYMENT LAW SPECIAL PROMOTIONAL FEATURE Perfection not the standard in legal drafting when parties' intentions clear and reasonable — Ontario Court Recent decision signals what employers hope is a return to a more pragmatic approach to contract interpretation IN SEPTEMBER of this year, Ontario's Superior Court of Justice released its decision in Rahman v Cannon Design Architecture Inc., 1 signalling what employers hope is a return to a more pragmatic approach to the interpretation of employment agreements. Rahman is the most recent in a line of decisions since Waksdale v Swegon North America Inc. 2 , in which the Court of Appeal for Ontario held that a "for cause" termina- tion provision that violates the Employment Standards Act ("ESA"), will invalidate an oth- erwise enforceable "without cause" termina- tion provision in the same agreement. The court would not "sever" the invalid provision, despite the agreement containing an enforce- able term stating any invalid provision should effectively be ignored (a "severability" clause). Instead, the court held the two termination provisions must be read together, such that if one was invalid they both were. The court was not moved by the fact that the employment in that case had been terminated without cause – in other words, the employer never sought to rely on the invalid, for-cause provision. In Rahman, the court rejected Waksdale's all-or-nothing approach of contractual interpretation, preferring a "context-driven approach" which allows the court to con- sider the intentions of the parties, their rela- tive sophistication and bargaining strength, whether they were represented by counsel, the language of the contract, and whether the contract is unconscionable or contrary to public policy. It remains to be seen whether Rahman will be adopted by other courts. If it is, this will be welcome news for employers and the reliability of written employment contracts, in general. What happened in Rahman? Farah Rahman was employed as "Principal" of Cannon Design Architecture Inc. She made $185,000 annually and was entitled to a discretionary bonus. At the time of her dismissal, Rahman was 61 years old and had just over four years service. Rahman sued for wrongful dismissal and brought a motion for summary judgment. The summary judgment motion primarily addressed the validity of the termination pro- visions in Rahman's employment contract. They stated the employer could terminate Rahman's employment at any time, without notice or pay in lieu, if there was "just cause for summary dismissal". The contract also clearly stated that Rahman would be entitled to no less than her minimum entitlements under the ESA (a 'saving provision'). Throughout the negotiation of the employ- ment contract Rahman was represented by counsel. She even negotiated changes to the termination provisions. Despite this, in her motion for summary judgment, Rahman sought to strike down the very provision she had negotiated, arguing the "just cause" lan- guage fell below the ESA minimum standard of "wilful misconduct". Relying on Waksdale, Rahman argued the entire termination pro- vision in her employment agreement should fall, allowing her to claim common law rea- sonable notice which would have amounted to considerably more. The motions judge rejected Rahman's argument and the all-or-nothing approach in Waksdale, preferring to consider the broader context in which the agreement had been struck. He found "no basis…to imply into the general phrase "just cause for summary dis- missal" a standard below the ESA standard of wilful misconduct absent any evidence that such represents a reasonable construction of the intention of the parties in the context of the employment agreement in question". As for the parties' intentions, the judge wrote, "[e]ven if hypothetical circumstances might be posited where the … Agreement might provide for a lower payment than the required ESA minimum, the agreement was quite clear that the ESA minimum would at all events be paid. There is no ambiguity at all Brought to you by Shana French and Sundeep Gokhale

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