The New Year ushered in a number of changes, and one which lawyers had been keeping their eyes on was whether the Supreme Court of Canada would agree to hear the appeal of Waksdale v. Swegon North America Inc., one of the more controversial legal decisions in recent memory.
In late January 2021 the Supreme Court ruled that it would not hear the Waksdale appeal, which meant that clauses in employment agreements intended to protect against termination pay claims are likely now void and unenforceable.
At issue in Waksdale was (i) whether a termination clause in an employment agreement that allowed an employer to pay nothing in the event of dismissal for “just cause” violated Ontario’s Employment Standards Act, 2000, and if so (ii) whether the unlawful “just cause” provision infected the rest of the employment agreement, such that any other clauses that sought to limit severance pay were also void and unenforceable, even if the employee was not terminated for just cause.
Since the lower courts broke from precedent in ruling “yes” on both counts, many expected the Supreme Court of Canada to right that error. Instead, the Supreme Court refused to hear the appeal, which means Waksdale is here to stay.
So what does this mean for condo corporations?
If the termination clause in an employment agreement for a Superintendent, concierge, cleaner, custodian, security guard, or other staff member is now unenforceable (which may be the case!), then a condo corporation will have to pay severance according to common law rules that tend to be much more favourable for employees.
For example, with a proper employment agreement a condo corporation can limit its severance pay obligation to approximately 1 week per year of service (maximum of 8 weeks), whereas under the common law that can rise to 1 month of pay per year of service (maximum of 24 months)!
As a result, it is critical that condo corporations review the contracts for their employees to ensure that any termination provisions are up to date and enforceable. If not, the cost of finding out after the fact can be severe.
Corporations should reach out to their legal counsel for guidance on how to assess the enforceability of staff employment agreements and/or to update those agreements and ensure future enforceability.
