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Ontario Court of Appeal Decision Raises Questions About Employment Law

The Ontario Court of Appeal has upheld a decision that I was certain was just plain wrong, for at least two reasons.  So, what do I know.

The case is called Musoni v. Logitek Technology.  Here is the brief Court of Appeal decision dismissing the appeal.  And here is my original post from when the lower court decision was released.  It includes a link to the lower court decision.  As I noted in the last post, this case may be just a lesson in the risk of self-representation in employment law matters, since the self-represented plaintiff appears not to have argued the two most obvious lines of attack available.

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Head Scratcher From the Court of Appeal

Here’s a quick summary.  From the facts, it appears that the employee is working away without a written contract, and therefore subject to the implied term requiring reasonable notice of termination.  Some 6 months into that employment relationship, the employer tells the employee to sign a new written employment contract that contains a term saying that the employer can terminate the contract by giving 15 days’ notice.  A couple of years later, the employer fires the employee and relies on the notice clause, giving him 15 days’ pay in lieu of notice.

The employee sues, asking for ‘reasonable notice’, but loses. Both the lower court and the Court of Appeal rule that the 15 day notice term in the new employment contract is enforceable. Any first year employment law student will quickly see two problems with this decision.

Firstly, unless the employee received some “new consideration”, a new benefit to which he was not otherwise entitled under the original verbal contract in effect for the first 6 months of his employment, the new written contract term would be unenforceable.  There’s lots of cases on this point, some of which I link to in my earlier post. So, what new consideration did the employee receive in Musoni?  The judge doesn’t tell us, or discuss this issue at all.

Secondly, in an earlier Ontario Superior Court ruling called Wright v. The Young and Rubicam Group,  the court said that a notice of termination clause in an employment contract is void if there are scenarios in which it could run afoul of the Employment Standards Act minimum notice provisions.  That was true even if the employee was given the ESA notice at the time he is fired.  The contract term in Musoni would violate the ESA the moment the employee’s seniority passed 3 years.  Therefore, applying the test in Wright, the 15 day notice term in Musoni is clearly void, and reasonable notice is required.

Neither the lower court nor the Court of Appeal make any mention of these two obvious legal impediments to enforcing the notice clause in the Musoni contract.  True, they probably were not argued, because the employee represented himself.  However, the Court of Appeal’s ruling that everything in the lower court decision was just fine leaves us scratching our head over this one.

Questions Arising from the Court of Appeal’s Approval of Musoni

Does it mean that consideration is not needed to introduce a new restrictive notice of termination clause during the life of an employment relationship?  Or was there consideration given to the employee and not just not mentioned in the judge’s rulings?

Does Musoni overrule the approach taken in Wright v. The Young and Rubicam Group decision on the question of the enforceability of a notice term that could violate the ESA at some point during the life of the employment contract?

Do you think the Court of Appeal meant to overrule earlier case law, or is it possible they just ignored it because the self-represented employee didn’t raise the arguments?

Should the Court of Appeal apply precedent that is not raised in argument before it?

In any event, it seems certain now that the confusion raised by this decision will need to be sorted out at some point by the Court of Appeal.

Thoughts?

 

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6 Responses to Ontario Court of Appeal Decision Raises Questions About Employment Law

  1. Sean Bawden Reply

    November 28, 2013 at 8:06 pm

    Prof. Doorey:

    As I argued in my post about this case (http://bit.ly/IjkeQM) my sense is that the problem was that the employee did not ask for “reasonable notice,” rather he asked for damages for ‘wrongful’ dismissal.

    Actually, reading the case, it looks more like he tried to argue “unjust dismissal” a la Canada Labour Code, which of course had no bearing.

    I fear the reason the case is so wanting – and it does leave me wanting – is because of what was actually argued and pleaded.

    I think the problem is not the result, but rather the question. I agree with your analysis, but I think the same was a result of what the plaintiff argued and did not argue.

    • Doorey Reply

      November 28, 2013 at 8:50 pm

      Thanks Sean, you are probably right. But I wonder though about a court of appeal ignoring altogether glaring legal problems arising from a fact scenario and producing a decision as a result that creates confusion in the community. We’ll see if this decision ends up having any impact. Maybe everyone will just ignore it.

      • Sean Bawden Reply

        November 28, 2013 at 9:27 pm

        We didn’t ignore it…

        But I agree, it does give me pause with respect to the two big issues you raise. But I go back to my concerns that if no one raised the argument, is it appropriate for the court to deal with it.

        It would have been more interesting had he been employed for three years – then what would the court have done?

  2. Robert Logue Reply

    November 29, 2013 at 5:41 pm

    Look at para. 7:

    [7] Plaintiff does not, therefore, claim that he was owed more money under the Employment Agreement. Rather, his claim is based on other alleged wrongdoing by the Defendant, some of which occurred at the commencement of his employment, some of which occurred during the course of his employment, and some of which he only learned of subsequent to his termination. His overarching argument is that although the Defendant purported to terminate him without cause, the Defendant actually intended to fire him for cause.

    I think that is the key to distinguishing this case in the future.

    • Dennis Buchanan Reply

      December 5, 2013 at 10:48 pm

      Indeed. And also, at the end of paragraph 3:

      “He concedes that the Employment Agreement is valid and in force.”

      At a glance, it looks very probable that he could have successfully argued otherwise, and sought pay in lieu of reasonable notice. But he conceded that the employment agreement was valid, and as unwise as that concession appears to have been, it probably was not open to the Court to come to a finding on an issue not in dispute.

      For the same reason, I’m not worried about the precedent value of this case.

  3. Dan McGarry Reply

    November 29, 2013 at 9:53 pm

    Hate to say it but after reviewing both decisions and Sean’s posting it appears as Sean has alluded to, that the Plaintiff greatly erred by representing himself. It seems that he did not address the salient points, instead focusing on the perceived unfairness of his dismissal.

    So to question #3: i) No ii) Yes.

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