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The “Wright” Way to Draft a Termination Provision

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In the recently released Ontario Superior Court of Justice decision in Wright v. The Young and Rubicam Group of Companies, it was confirmed that a termination provision in an employment agreement will not be upheld if there are any ambiguities in the language of the provision.

Wright was hired in 2005 as an executive at the defendant company.  He signed an agreement prior to his start date, which provided for entitlements on termination ranging from 1 week of notice to 34 weeks of base salary, depending upon his length of service.  On being terminated in 2010, he was given 13 weeks of pay in lieu of notice pursuant to that agreement.  Unhappy with that amount, he commenced a claim and brought a motion for summary judgment.

At the hearing, Justice Low overturned the employment contract and agreed with Wright that he should have received common law notice of termination. The contract was overturned for two reasons.  First, because it did not track the language of the Employment Standards Act, 2000 (Ontario) (the “ESA”) carefully, there were a few years under which Wright might have earned more by way of statutory notice and statutory severance under the ESA than under his contract.  That is not permitted, even in cases where it is only a contingent possibility that a contract may undercut the ESA.  Secondly and more importantly, the termination provision did not mention the treatment of benefits during the notice period.  Justice Low found that it was irrelevant that benefits were in fact provided to Wright during his statutory notice period, and stated that the termination provision should have clearly set out the benefits entitlement as well as the notice and severance entitlement.

No matter how many times your company may review and revise its employment agreements, a further review is always recommended.  And in light of this decision, employers should consider dealing, in the employment agreement, with treatment of benefits on termination.

Wright v. The Young and Rubicam Group of Companieshttp://www.canlii.org/en/on/onsc/doc/2011/2011onsc4720/2011onsc4720.html

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