Recently, Zubas Flett Liberatore Law Lawyer, Daniel Hassell, was quoted in a case comment by Jeffrey Smith of Canadian HR Reporter. The article, which discussed ambiguous language in termination clauses, is available to read here and below.
‘The attempt to use one employee handbook across multiple jurisdictions was a major issue’: Lawyer
A company’s termination provisions in an employment contract breached employment standards legislation and is therefore unenforceable, leaving a worker entitled to common law reasonable notice, an Ontario court has ruled.
It’s a ruling that’s consistent with several recent cases dealing with ambiguity in the language in termination clauses around without-cause termination, according to Daniel Hassell, an employment lawyer at Zubas Flett Liberatore Law LLP in Toronto.
“A lack of distinction between just cause at common law and the more narrow threshold for willful misconduct under the Ontario Employment Standards Act, 2000 (“ESA”) creates some ambiguity about when the employer can terminate the employee’s employment without notice and without statutory entitlements to severance pay,” says Hassell. “Courts are really emphasizing the importance of an employee being able to understand to what they would be entitled at the end of their employment, when they’re signing the employment agreement.”
The worker, 51, was employed with Salesforce.com Canada Corporation, a software company in Toronto, as a Senior Success Signature Engineer – Core. He was hired in 2015.
Termination Clause
The worker’s employment contract included a termination clause that contained a provision allowing Salesforce to terminate the worker’s employment for cause with no compensation or notice. It defined “cause” as “any act or omission by you that would in law permit the company to, without notice or payment in lieu of notice, terminate your employment.”
There was also a provision allowing the company to terminate the worker’s employment without cause “at its sole discretion and for any reason whatsoever” by providing the “minimum period of notice (or pay in lieu) and severance pay, if any, to which you are entitled pursuant to the applicable employment or labour standards legislation” as well as benefits during that minimum notice period.
When the worker accepted the employment offer from Salesforce, he had to sign a “global employees handbook” that included a provision saying that the company operated around the world and was governed by different local laws, and if there was a conflict in the laws, he should consult the company’s legal department. It also stated that the employment relationship with all employees was “at will,” meaning that employment could be terminated by either the worker or the company at any time, with or without cause.
Employment agreements for employees outside of the US would prevail over any conflict with the handbook’s policies, but all other policies would apply.
On Jan. 4, 2023, Salesforce provided the worker with written notice that his employment would be terminated in just over 11 weeks’ time, on March 24. The move was part of the company cutting about 10 per cent of its workforce. The worker was on holiday when he received the emailed termination letter and he first heard of his termination when a colleague texted him to advise that the worker had been deactivated on Slack, an employee communication platform.
The worker received salary continuation and benefits over the 11-week notice period and severance pay on the termination date. He continued to receive some benefits for eight months after his termination.
Employment Agreement Unenforceable: Worker
The worker sued for wrongful dismissal, arguing that the termination clause in his employment agreement was unenforceable because it didn’t comply with the ESA. He claimed entitlement to 14 months’ common law reasonable notice plus aggravated and punitive damages for Salesforce breaching its duty of good faith in how it carried out the termination.
The court noted that previous decisions had established that if a termination clause intends to rebut the presumption of reasonable notice, it must be clear in its language. This was because employees should know when they’re hired what their entitlement would be if their employment is terminated, the court said, adding that a clause with more than one potential interpretation will be interpreted in a way that gives the greater benefit to the employee.
The court found that the termination clause in this case created ambiguity regarding the worker’s entitlements upon termination. The definition of cause didn’t specify between common law just cause and the ESA’s requirement that only “willful misconduct” could deprive an employee of the statutory minimum notice or termination pay, the court said.
If an employer wants to avoid the potential for ambiguity in a termination clause, it could refer specifically to the applicable legislation, says Hassell.
“The employer could set out the specific wording that would exclude notice and severance entitlements for only the willful misconduct threshold in the ESA, instead of the just cause threshold at common law, which is slightly different,” he says.
Employee Handbook Added to Ambiguity
In addition, the employee handbook that referred to the use of “at-will” employment – which is illegal in Canada – created further confusion, since the worker was required to sign it as part of his overall employment agreement, said the court in finding that “there is no practical way that an employee in Ontario could be aware, when signing the contract, of the terms that would govern his termination.”
As for the employee handbook’s statement that employees should refer to the company’s legal department to address any conflict in jurisdictions outside the US, this wasn’t a reasonable expectation for a new hire who hadn’t yet started employment, the court said.
“The attempt to use one employee handbook across multiple jurisdictions was a major issue, and the court seemed to pinpoint that as the source of the ambiguity,” says Hassell. “So if the employer had used an employee handbook that was tailored to each particular jurisdiction, including Ontario, then there could have been greater chance that the termination clauses would be enforceable.”
The court determined that the worker was entitled to 11 months’ reasonable notice. However, it reduced the notice period to eight months because the worker refused to produce his notice of assessment showing any mitigation earnings during the notice period. Since such income would be deducted from the worker’s damages, the court made an adverse inference.
“It’s an unusual deduction – the court drew an adverse inference from the worker’s refusal to provide the notice of assessment and the lack of transparency, and it reduced the notice period presumably because the worker did earn something during that period,” says Hassell. “It’s an important tip for employers in litigation to ask for all the appropriate documents from the employee, and to ask the court to draw an adverse inference if an employee fails to provide the documentation that the employer is entitled to review.”
Bonus Payments for Notice Period
The court also found that the worker was entitled to the 2022 fiscal year bonus that became payable in April 2023 during the reasonable notice period, and a pro-rated 10 per cent bonus for the period he worked in the 2023 fiscal year. Although Salesforce argued that the bonus plan required the worker to be an active employee at the time of payout,
there was no evidence that it was brought to the worker’s attention or that the worker signed of on it, the court said.
“It’s a lesson for employers to keep careful records of bonus plan documentation and confirmation that employees have reviewed and agreed to it,” says Hassell.
The court denied the worker’s claims for aggravated and punitive damages. Salesforce’s handling of the termination was imperfect – delivered during his vacation with no direct communication – didn’t rise to the level of bad faith required for moral or punitive damages, said the court, noting that the company was managing a large layof and it provided more than 11 weeks’ working notice.
Salesforce was ordered to pay the worker eight months’ pay in lieu of notice, a 2023 fiscal year bonus of $12,808.06 minus a $2,898.89 advance, a pro-rated bonus based on 10 per cent of salary for the portion of his notice period falling in fiscal 2023, the equivalent of certain benefits during the notice period, and pro-rated RRSP contributions for the notice period.
“It’s often not prudent to try to use one employment contract or employee handbook across multiple jurisdictions,” says Hassell. “Termination clauses in employment contracts should be reviewed for compliance in each jurisdiction in which the employer intends to use them, and all documents attached to an employment contract should also be vetted for compliance with local employment standards legislation.”
Despite the court’s finding of no bad faith, the way Salesforce terminated the worker’s employment was risky, according to Hassell.
“This may have been a close call – some of the mistakes made by Salesforce, such as the worker learning about his termination through a text message from a colleague, could have resulted in additional damages,” he says. “Termination of employment by email, even though there were so many employees let go at that time, could have been handled a bit differently in ideal circumstances – reviewing the termination letters carefully and communicating the termination of employment in a respectful way is really important.”
See Boyle v. Salesforce.com, 2025 ONSC 2580
If you have any questions or inquiries regarding termination clauses or employment contracts, contact Zubas Flett Liberatore Law at 416-593-5844 or questions@employment-lawyers.ca