The Ontario Court of Appeal recently agreed with a lower court decision that an employer and employee cannot reset the length of an employee’s term of employment in order to get out of standards set out in the Employment Standards Act (“ESA”).

What Happened?

The employee wasa professional architect in the Kingston region. In February 1986, he commenced full-time employment as an architect with an architectural and engineering firm. In 2002, the firm sold its business to the employer and the employee began working for the employer.

In early 2013, the employee raised the possibility of transitioning from full-time to part-time hours. This request became the subject of negotiation for several months, which was documented in a series of emails and letters between the parties. Finally, in July 2013, the employee secured the employer’s agreement to reduce his hours from full-time to part-time employment.

However, the employer was not prepared to agree to the employee’s transition from full-time to part-time employment unless he resigned from his employment, entered into a new employment agreement, waived his years of service, limited his notice entitlement to the date of the signing of the new agreement, and forewent any accrued entitlement to severance pay for his past years of service with the employer.

After having obtained legal advice, on July 17, 2013, the employee sent the following written acknowledgement of the agreement between the parties:

“Please accept this letter as notice of my wishes to reduce my work week and resign from my full time position as Senior Architect from the [employer’s] Kingston office. This is conditional on acceptance of a new offer of employment for part time hours, conditions which have been discussed with and agreed to […].

I understand that the new employment terms will be in accordance with the Employment Standards Act of Ontario. Termination, notice and severance for my past employment will not form part of the new terms of employment.

On July 31, 2013, the employee signed the new employment agreement.

In early January 2016, the employer terminated the employee’s employment effective February 19, 2016. The employer gave him 3.5 weeks’ notice of termination based on his service from July 2013, and offered to continue the employee’s benefits for a period of two weeks following the effective date of termination. The employer did not provide the employee with severance pay on termination.

Lower Court Decision

The motion judge, on summary judgment, determined that the employee had not waived his years of service and that he was entitled to termination and severance pay under the ESA based on all his years of service.

As a result, the motion judge determined that the employee was entitled to 8 weeks’ notice of termination and 26 weeks of severance pay under the ESA.

Court of Appeal Decision

Section 5(1) of the ESA provides as follows:

“Subject to subsection (2), no employer or agent of an employer and no employee or agent of an employee shall contract out of or waive an employment standard and any such contracting out or waiver is void.”

This provision of the ESA prohibits any contracting out of or waiver of minimum statutory employment entitlements and provides that any such contracting out or waiver is void.

The Court of Appeal agreed with the lower court decision that the 2013 agreement was void, stating:

“The motion judge correctly found ineffective the attempt by the purported resignation to break [the employee’s] years of continuous service in order to limit his entitlement to termination pay and obviate his right to severance pay as an employee of more than 5 years. She concluded that neither [the employee] nor [the employer] intended him to resign from his employment. […]

I agree that [the employee’s] purported resignation and waiver of his accumulated years of service represented an illegal attempt, contrary to s. 5(1) of the ESA, to contract out of the ESA.

The court dismissed the appeal.

For Help

The Kitchener-Waterloo employment lawyers at Petker Campbell Postnikoff have many years of experience advising non-unionized employees and employers on a variety of workplace issues, including harassment and termination. Our team will walk you through the details of your dispute, advise you on your rights, responsibilities and obligations, and help you understand your options. If your dispute cannot be settled through negotiation, we can represent you through mediation and the court process.

We represent clients throughout southern Ontario, including the communities of Cambridge, Guelph, Elmira, Brantford, Fergus, Elora and the surrounding area. Call 519-886-1204 or contact us online for a consultation.