Back in June of last year we wrote about an Ontario Court of Appeal decision that was, in a word, "troubling", for employers: Waksdale v Swegon North America Inc., 2020 ONCA 391. The problem from an employer's perspective was that the Court of Appeal essentially opened wide the door for plaintiffs – or more accurately their counsel – to challenge what would previously have been unassailable employment agreements.
If you follow The Employers' Edge you know that there have been many changes to the law over the last decade when it comes to the enforceability of employment agreements; most specifically, numerous challenges have been upheld for various reasons when it comes to the validity of the all-important termination clause. When Waksdale came out, it was hailed as a real game-changer by the plaintiff side, and bemoaned on the employer side as a further erosion of employer rights in employment contract drafting.
Unfortunately, the hoped-for clarity that the Supreme Court of Canada could have provided on this situation will not be forthcoming. Without commenting as to the "why", the Supreme Court dismissed Swegon's Leave to Appeal Application, meaning that they will not hear the case. Accordingly, the principles espoused in the Court of Appeal decision will continue to be relied upon by employee counsel in challenging contractual language at termination.
However, despite the Supreme Court declining to intervene, we – along with other employer counsel – do not believe Waksdale to be the death knell for employment agreements. Certainly, going forward employers must be wary of how those agreements are worded: a task with which the team at CCPartners can assist. However, not every historical agreement is suddenly worthless: with Waksdale being mentioned in every demand letter, it is important to know that your employment agreement is not necessarily void just because your employee's lawyer cites that case. In fact, there are certain factors that must be met in order for the reasoning in Waksdale to apply, so it is important to get proper advice from legal experts based on the specific wording of your employment agreement before negotiating any termination package.
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