By Nicole A. McAuley

It is well established in Canada that termination for just cause is considered “capital punishment” in employment law. It is reserved for significant incidents of employee misconduct. In order to establish sufficient justification of a for cause dismissal, the evidence must be steadfast. Often this requires a clear record of progressive discipline; although, in rare circumstances one incident of misconduct may be sufficiently severe to establish just cause.

Goruk v. Greater Barrie Chamber of Commerce, 2021 ONSC 5005 involved the termination for cause of a long-term employee of the Greater Barrie Chamber of Commerce (the Chamber); a not-for-profit organization governed by a volunteer Board of Directors. The employee, Sybil Goruk (Ms. Goruk), had been the executive director of the Chamber for the vast majority of her 17-year tenure with the Chamber. In her role, Ms. Goruk owed fiduciary duties to the Chamber and its Board, including the duties of loyalty, trust, and good faith.

In early 2014, Ms. Goruk was placed on a paid suspension pending the outcome of an investigation into financial abnormalities, which had recently come to the attention of the Board, as well as an allegation of misconduct.

Upon completion of the investigation, the Board determined that Ms. Goruk had been involved in the following acts: (1) uttering a forged document to the Chamber’s bank; (2) taking unauthorized accrued vacation pay; (3) granting herself an unauthorized pay raise; (4) awarding service contracts to her children’s companies without following the established protocol or disclosing the relationship to the Chamber’s auditor; (5) suppressing a letter from the Chamber’s auditor which expressed concerns regarding their financial statements; and (6) reimbursing herself for charges to her personal credit card without supplying proper supporting documentation. Additionally, Ms. Goruk had impeded the treasurer’s access to the Chamber’s books and records for a significant period of time, and had permitted the use of the Chamber’s internal broadcast system to members to send out an e-broadcast that was critical of the Board. Ms. Goruk was terminated for just cause. At the time of termination, Ms. Goruk had no documented performance issues and no history of progressive discipline.

Thereafter, she commenced the within action, seeking pay and benefits in lieu of notice for two years, in addition to aggravated and punitive damages. The matter proceeded to a virtual trial with Justice Boswell presiding.

In examining the facts relied upon by the Chamber in support of the just cause termination, Justice Boswell found that the independent acts of misconduct were not in and of themselves sufficient to amount to just cause. However, his Honour found that when the totality of the events was considered, they clearly demonstrated a lack of honesty and integrity, as well as the exercise of poor judgment. It was determined that Ms. Goruk’s conduct was incompatible with the fundamental terms of her employment relationship and that the Chamber had just cause for termination.

In his analysis, Justice Boswell highlighted the fact that the Chamber is a not-for-profit organization that has a high profile within the community and a strong reputation for integrity and honesty. As such, the volunteer Board’s loss of faith and trust in Ms. Goruk’s ability to carry out her role as executive director was significant.

The timing of the discovery of these issues was also an important factor in this decision. It was noted by Justice Boswell that “all of the issues that led to the termination of Ms. Goruk came to a head at or around the same time period.” It was the culmination of the incidents, which were discovered over a fairly short period of time, that amounted to a repudiation of the contract. As such, Justice Boswell found that in the circumstances, it was unnecessary for the Chamber to provide warnings or implement a progressive approach to discipline.

The issue of costs was recently addressed by the Court. Following seven years of this action and 13 days of trial, the Chamber was awarded roughly $143,000 in costs. The Chamber had sought significant costs due to the fact that they had made a Rule 49 offer to settle for $25,000 prior to trial, which the plaintiff never accepted. The plaintiff had advanced claims of impecuniosity and Justice Boswell was sympathetic to same; however, he noted that:

[I]t remains a difficult reality that litigation is an expensive business. It is not for the risk averse or faint of heart. There are winners and there are losers. And it is a well-established convention in our civil justice system that losers pay the winners a significant portion of their costs.

This is an important decision for employers when assessing whether an employee in a fiduciary position may be terminated for just cause without imposing a plan of progressive discipline. As aforementioned, the close proximity of the incidents of poor judgment and the discovery of the financial misfeasance played a significant role in the Court’s finding that progressive discipline was not required. We can also not disregard the impact of the fiduciary duties this employee owed to her employer. Had the fiduciary duties not been established, or if the same incidents been discovered over a number of years, the decision would most likely have been very different.

While this decision is helpful to employers, it remains the case that the burden to establish just cause is extremely high and the facts must be evaluated on a case by case basis. It remains extremely important for employers to seek legal advice prior to taking any steps to terminate an employee under any circumstances.

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By Nicole A. McAuley

On April 27, 2021, the Ontario Superior Court of Justice released its first decision interpreting the Infectious Disease Emergency Leave Regulation O Reg 228/20 (“IDEL Regulation”) under the Employment Standards Act, 2000, SO 2000 c 41 (“ESA”). Therein, Justice D. Broad determined that employees who were temporarily laid-off because of the COVID-19 pandemic can be successful in constructive dismissal claims at common law, despite the IDEL Regulation.

Early on in the pandemic, there were a large volume of temporary lay-offs by employers who do not typically utilize lay-offs. Pre-pandemic, the case law in this area was well established: where an employment agreement does not contain an enforceable provision allowing for a temporary lay-off, a laid-off employee is deemed to have been constructively dismissed. As many employers had not taken such actions previously, their employment agreements did not contain lay-off provisions. While most of these lay-offs were done out of necessity as a result of the employers’ financial hardship, it was unclear how they would be treated by the courts going forward.

In an attempt to protect employers from constructive dismissal claims in an already precarious time, the province enacted the IDEL Regulation under the ESA.  While  employers could not be sure how the IDEL Regulation would be applied in future legal actions, it was hoped that, given the economic implications of the pandemic, the IDEL Regulation would shield employers from such actions. Based on this first decision, these efforts do not appear to have been successful thus far.

Coutinho v. Ocular Health Centre Ltd. 2021 ONSC 3076

The defendant in this matter operated ophthalmic clinics in Cambridge and Kitchener, Ontario. The plaintiff was employed as the office manager of the Cambridge clinic. In April 2020, a commercial dispute between the defendant’s principals and doctors led to the clinic shutting down. The dispute included allegations that the clinic staff and its doctors had failed to comply with social distancing procedures, among other things.

The plaintiff arrived at work on May 1, 2020 to find the locks had been changed. She was advised that the office was closed, but she would be paid. On May 29, 2020, she received a letter from a principal of the defendant informing her that she had been placed on a temporary lay-off and would no longer receive a salary.

The plaintiff issued a Statement of Claim on June 1, 2020 alleging constructive dismissal. Therein, the plaintiff took the position that nothing in the ESA or its regulations eliminated her common law right to pursue a civil claim for constructive dismissal. She argued that the existing case law on lay-offs should prevail.

The defendant took the position that the plaintiff’s hours of work were temporarily reduced for reasons related to COVID-19. She was therefore deemed to be on Infectious Disease Emergency Leave, as contemplated by the IDEL Regulation. Pursuant to the IDEL Regulation, the temporary reduction of the plaintiff’s hours did not constitute a constructive dismissal and therefore the plaintiff had no cause of action.

The defendant moved for summary judgment on this basis. It argued that given the severity of the impact of COVID-19, the IDEL Regulation should be interpreted to apply to constructive dismissal pursuant to the ESA as well as at common law.

Unfortunately for employers, Justice Broad found that the IDEL Regulation did not affect the plaintiff’s right to pursue a claim for constructive dismissal at common law, and dismissed the summary judgment motion. The starting point for Justice Broad’s analysis was section 8(1) of the ESA, which provides:

Subject to section 97, no civil remedy of an employee against his or her employer is affected by this Act.

Section 97 had no application to the case at hand. Relying upon section 8(1), the Court found that the IDEL Regulation could not be interpreted to remove an employee’s right to pursue a common law action for constructive dismissal.

The decision also highlighted the Ministry of Labour, Training and Skills Development’s document titled “Your Guide to the Employment Standards Act: Temporary Changes to the ESA Rules”. Therein, it stated, amongst other things:

These rules affect only what constitutes a constructive dismissal under the ESA. These rules do not address what constitutes a constructive dismissal at common law.

Justice Broad found that the guide was helpful to understand the legislative intent of the IDEL Regulation as it relates to constructive dismissal. The Court relied upon evidence of this intention in coming to its decision.

The decision did not address whether the common law on constructive dismissal and lay-offs needs to be updated to reflect the unique circumstances of the global pandemic. It is not clear, based on the decision, whether extensive arguments to this effect were advanced by the employer in this case. It remains unclear, if such arguments were made in future actions, whether the Court would support such changes. Understandably, that is certainly the hope of many employers.

It is likely there will be many more decisions to come on this subject, and it is expected that the Ontario Court of Appeal will be asked to weigh in at some point. We will continue to pay close attention to all such developments, as this highly anticipated issue continues to unfold.

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Nicole A. McAuley

Many Ontarians spent the past year adjusting in accordance with the ever-changing public health directives for workplaces. Most employers and employees have become comfortable with safety plans, working from home, masks, regular sanitizing and hand washing, and social distancing. Now, as the vaccines are rolled out and becoming available to a wider range of employees, many employers are left wondering whether a mandatory vaccination policy would allow them to return to a pre-pandemic workplace scenario sooner than anticipated. While this may be appealing, the liability implications of all such policies should be carefully considered prior to their introduction.

It is well known that employers have an obligation to maintain the health and safety of their employees in the course of their employment. That can mean very different things, depending on the type of workplace. A hospital, a factory, and an office all require different measures to ensure employee safety.

When approaching the issue of a mandatory vaccination policy, employers must assess how such a policy will balance their employees’ human rights and privacy against the employer’s obligation to maintain health and safety in the workplace. There is no panacea and an employer may be required to have different approaches/policies for different workplaces. Mandatory vaccination is an intrusive imposition on employees, which requires them to undertake medical treatment that may result in an adverse reaction, or may be contrary to the employees’ religious/moral beliefs.

When assessing whether a mandatory vaccination policy is appropriate for a specific workplace, an employer must assess the transmission risk in the workplace and determine whether vaccination is a reasonable requirement of employment. Consideration should also be given to whether workers are regularly in contact with vulnerable people, whether there is a history of transmission in the workplace (by employees or others), whether alternative, less intrusive measures can sufficiently mitigate the risks, and the specific circumstances of each workplace.

It is important for employers to be aware that the imposition and enforcement of a mandatory vaccination policy could result in wrongful dismissal and/or human rights claims. Employees may object to such policies for medical or religious/moral reasons. In such circumstances, employers have an obligation to accommodate their employees to the point of undue hardship. If an employee cannot be accommodated with modified work or working from home, the employee is entitled to take a COVID-19 related, job-protected, unpaid infectious disease leave. However, if an employee has been effectively working from home or on modified duties prior to the imposition of such a policy, it will likely be difficult for an employer to establish that it can no longer accommodate the in employee in the same manner.

The imposition of a mandatory vaccination policy could also result in allegations of constructive dismissal, where an employee could claim that the employer unilaterally changed the fundamental terms of their employment.

It is currently unclear how courts and tribunals will respond to legal challenges related to such policies. Pre-pandemic, mandatory workplace vaccinations and “mask or vax” policies were litigated in the health care industry and the decisions were largely divided. Decisions where these policies were struck down, often included a finding of insufficient evidence proving that such a policy greatly limited the spread of disease. Given the rate of effectiveness of COVID-19 vaccines, the impact of asymptomatic spread of COVID-19, the evidence in support of masking policies, and the potential impact of contracting COVID-19, many people are of the opinion that “mask or vax” policies in relation to COVID-19 will likely have a stronger chance of being upheld in the right types of workplaces, such as healthcare and industrial/factory settings. In order to be successful in such challenges, employers will need to exemplify why alternative measure are insufficient.

Whether or not someone is vaccinated is sensitive personal health information. Employers must pay careful attention to who is collecting information, what protections are in place to safeguard the information, and who will have access to this information. Employers must ensure that the collection, storage, and use of this information complies with the relevant statutory requirements.

Notably, mandatory vaccination policies are just one way to address workplace safety and will not necessarily be justified for every workplace. To date, neither the federal nor provincial governments have elected to make vaccinations mandatory across the population, or in relation to any specific industries. It may be that continued permission to work from home, masking, sanitizing, and social distancing in accordance with the continued public health directives are sufficient to protect employees in a workplace. This will likely be the case in office environments, absent special circumstances.

If an employer decides to proceed with a mandatory vaccination policy, they must decide how the policy will be communicated to employees. All vaccination policies must include a procedure for employees requesting workplace accommodations for valid exemptions and employers must make information about that process available to all employees. All policies should be consistently enforced across the workplace, with the exception of people who require accommodation for medical and religious/moral reasons. The imposition of a mandatory vaccination policy requires careful consideration. Consultation with appropriate legal counsel can assist employers weigh these considerations and help avoid pitfalls with the design and roll-out of such policies.

Vaccines are not 100% guaranteed and asymptomatic transmission of vaccinated people to non-vaccinated people is still unclear. Whether or not employers decided to impose mandatory vaccination policies, they must ensure other preventative measures such as social distancing, masking, sanitizing, and hand washing are enforced in the workplace until public health guidelines change.

Note: This article is only in relation to non-unionized workplaces. Unionized workplaces have additional factors that must be considered. Legal counsel should be consulted in advance of the imposition of any such policies.

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By Nicole A. McAuley

Many workplaces in Ontario that were temporarily closed as a result of the pandemic have re-opened or are in the process of re-opening. With the risk of contracting COVID-19 still looming, employers are likely to find some employees are reluctant to return to their workplace. Employee reluctance may stem from reasonable safety concerns, or may simply reflect an employee’s preference to continue working from home. Employers must be prepared to navigate such requests in consideration of the Occupational Health and Safety Act [the OHSA], the Human Rights Code [the Code], and public health directives.

Before reopening a workplace, employers should develop a COVID-19 policy. The policy should be specific to the needs of each individual workplace and take into consideration the guidelines developed by the federal government, which are available here, and the provincial government, which are available here.  Once the policy is established, each employee’s refusal to attend the workplace must be considered on a case-by-case basis.

COVID-19 and the OHSA

Employers have an obligation to take reasonable precautions to protect the health and safety of employees. Where an employee has a reasonable belief that their work conditions are unsafe, including due to COVID-19, they may refuse to attend the workplace on the basis of the protections afforded under the OHSA. If such a work refusal is made, the employer has an obligation to investigate the alleged hazard and eliminate or reduce same. Thereafter, the employee may still refuse to work if they have reason to believe that they are in danger. When this occurs, the employer or the employee must notify the Ministry of Labour [MOL] and a MOL inspector will investigate the refusal to work. A decision in writing is then released by the MOL, which will either require the employee to return to the workplace, or order the employer to take remedial measures. There is a lot involved in this process, which is beyond the scope of this blog post.

An employee may refuse to return to work due to a general fear that they will become infected with COVID-19. If the employer follows the federal and provincial guidelines, public health directives, and the OHSA requirements, the employer will likely be considered justified in determining that a work refusal because of fear of infection is insufficient. However, the employer is still required to complete the above-noted process under the OHSA in order to come to that conclusion.

COVID-19 and the Need for Accommodation under the Code

 An employee who is under a requirement to quarantine in accordance with public health orders or directives cannot be compelled to return to workplace until they are able to safely do so. In such situations, job protected leaves may be available; however, if the employee is able to continue to work from home that accommodation should be provided.

There may also be situations where an employee cannot return to work because they are caring for someone infected with COVID-19 or do not have appropriate child care. Public schools in Ontario remain closed. While some day cares have reopened, spots are limited due to the provincial directives, and most summer camps/recreational activities have been cancelled. In such cases, employees may be entitled to job protected leaves. However, if such an employee has been successfully working from home prior to the workplace reopening, an employer should give serious consideration to a request for accommodation to allow the employee to continue doing so.

Some employees may advise that they are unable to return to the workplace because they are at high risk of contracting COVID-19, are likely to endure significant complications if they contract the disease, or have other medical considerations relating to mental or physical health. If the accommodation request is medical in nature, an employer would typically request a letter from a treating physician. However, since the outset of the pandemic, the Province of Ontario has mandated that employers are not permitted to ask for medical documentation to substantiate an absence from work due to COVID-19. In such a situation, an employer should assess the information provided by the employee. Employers have an obligation to assess each request for accommodation individually to determine what can be done up to a point of undue hardship. Where an employer suspects that an employee requires accommodation but the employee has not requested it, employers have a duty to inquire whether the employee has such a need.

It may be possible to accommodate in a way that would allow the employee to return to the workplace. Such accommodation may include staggered start and end times, a schedule that includes both attending at the workplace and working from home, or modifications to an employee’s work space. Employers can propose an alternative form of accommodation and request the employee’s feedback with respect to whether it would meet their needs. An employee is not entitled to work from home merely because they request this form of accommodation. If a reasonable alternative is offered that would sufficiently meet the employee’s needs, they are required to engage with the employer to find reasonable accommodation. Employers must keep in mind that they have a positive obligation to accommodate employees to the point of undue hardship, and the standard to establish undue hardship is very high.

If a request is not based on a need for accommodation or legitimate health and safety concerns, an employer is entitled to require that the employee return to the workplace. In such situations, an employer may wish to advise that employees were only permitted to work from home due to health and safety concerns and public health directives. As the workplace has now reopened, if there are no legitimate reasons upon which a request is made, employees are required to return to the workplace. This can be a complicated and subjective process that requires careful consideration and interpretation/application of the above-noted legislation and common law. Employers should seek legal advice to assist with these requests in order to ensure that the rights of all involved are protected.

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This week, the Court of Appeal released a decision that will drive lawyers back to their clients’ employment agreements with a fine-tooth comb to ensure all provisions of the contract are perfectly compliant with the Employment Standards Act, 2000, S.O. 2000, c. 41 (the “ESA”). In Waksdale v. Swegon North America Inc., 2020 ONCA 391, the Court of Appeal decided that a defective part of a termination clause, even if irrelevant to the situation, can render the entire provision void and unenforceable.

In this case, the Appellant worked as the Respondent’s employee for eight months, and earned a salary of $200,000 per annum. The Respondent terminated the Appellant without cause and provided two-week’s pay in lieu of notice, pursuant to the employment agreement. The Appellant sued the Respondent for wrongful dismissal and moved for summary judgment, arguing that the Respondent did not provide him with reasonable notice of dismissal. The Appellant took the position that the termination clause in his employment agreement was void because the “Termination for Cause” provision breached the ESA. The Respondent conceded to the non-compliance, but argued that it was irrelevant; the Respondent was relying on the entirely different, and legally-sound, provision related to Termination with Notice. The Motion’s Judge agreed with the Respondent and dismissed the Appellant’s action on the grounds that the Termination with Notice provision acted as a stand-alone, unambiguous and enforceable clause.

On Appeal, the Court overturned the lower Court’s decision, holding that the Motion’s Judge erred in applying a piecemeal method when interpreting the termination clauses without proper regard to their combined effect. The Appeal Court held that the correct analytical approach was to determine whether the termination provisions in the employment agreement read as a whole violated the ESA.

Interestingly, the Court of Appeal also refused to give effect to a severability clause in the agreement that could have nullified any illegal provisions while preserving the remaining contract. Having concluded that the Termination for Cause provision and the Termination with Notice provision were to be interpreted together, the severability clause could not apply to sever the offending portion of the termination provisions.

The Court stated that decision makers should focus on whether the employer has, in restricting an employee’s common law rights on termination, violated the employee’s ESA rights. While Courts may permit an employer to enforce a rights-restricting contract, they may not enforce termination provisions that are in whole or in part illegal.  In conducting this analysis, it is irrelevant whether the termination provisions are found in one place in the agreement or separated, or whether the provisions are by their terms otherwise linked.

This deferential ruling in favour of the employee stems from a long tradition of tipping the scale in favour of the vulnerable party where there is a power imbalance. Earlier Court of Appeal decisions held that the purpose of the ESA is to protect the interests of employees, and not those of the employers. For now, it is unclear whether this ruling is limited to termination clauses or can be extended to other provisions that contravene the ESA. Therefore, to avoid the risk of deeming any pertinent clauses inoperative, the best way forward is to ensure each provision of the contract is statute-compliant.

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Can Employees Rely on a Progressive Discipline Policy?

In Nelson v. Canada (Attorney General), (2019 FCA 222), the Applicant sought judicial review of a decision of the Appeal Division of the Social Security Tribunal, which affirmed that the Applicant lost her job because of her own misconduct and therefore, would not qualify for employment insurance.

The Applicant was a receptionist for the Gitxaala Nation (the “employer”). She was terminated after the Employer received a report from a community member that, contrary to the terms of her employment, she was seen publicly intoxicated on the reserve. The Applicant had signed a declaration affirming her understanding that this was a dry-reserve and that her employers adopted a zero-tolerance policy for alcohol consumption, even in private spaces. Furthermore, the employer had allegedly discussed its policies with the Applicant prior to the incident, warning that any breach of the policy would result in termination. The Applicant disputed this meeting.

Following the termination, she was denied Employment Insurance on the grounds that she had been socially drinking in her home, and this amounted to misconduct, a valid exemption to receiving benefits. It was not a consideration that other employees would engage in similar behaviour without the same consequences. The Applicant appealed to the Commission, alleging that though she knew she would breach a condition, she did not expect to be terminated because the Employer’s progressive discipline policy required that they provide her with a warning or suspension prior to dismissal. The Commission denied the Applicant’s request for benefits. The Applicant then appealed to the General Division (“GI”) which affirmed the Commission’s findings. The GI also held that the employer was not bound by its progressive discipline policy; the important part was the Applicant signed on the dotted lines prohibiting drinking as a condition to the employment. On appeal, the Appeal Division concurred.

The Employee brought an application for judicial review. The Application was dismissed. The Appeal Division did not err in determining that the Applicant knew that termination was a possibility if she continued to consume alcohol on the reserve, and that her behaviour amounted to misconduct. The Applicant was not entitled to rely on the Employer’s progressive discipline policy or the fact that other employees had received warnings or suspensions prior to termination for drinking on reserve.

Simply because a progressive discipline policy exists, does not mean an employer is bound by it, nor its inconsistent management of it.  In other words, an employee cannot rely on the principle of estoppel in pais (estoppel by conduct) to argue that the employer should offer them the same leniency observed previously, or with other employees; the employment contract and the conditions contained therein, remain the only determining force in any breach of policy case.

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Limits on an Employer’s Duty to Accommodate: Frustration of an Employment Contract

When an employee is on long-term disability leave, the employment law regime provides that the employer has a duty to accommodate their employees. One such duty compels employers to preserve the employee’s right to return to work. But, how does the law govern cases where an employee’s absence extends beyond 5 years and the employee has no prospects of returning? How long does the law protect their employment? The Ontario Divisional Court’s recent decision in Katz et al. v. Clark [1] provided insight into such questions. The answer: not indefinitely. The law now dictates that an employer can terminate an employee for frustration of contract, because it is “inherently impossible” to accommodate those who cannot return to work.

In this case, Mr. Clarke had been employed by Katz Group (“Katz”) for 13 years as a Front Store Manager. Due first to depression, and then to a leg injury, he had been on a leave of absence since 2008. In early 2013, when Katz learned that Mr. Clarke was unable to perform essential work duties, and there was no reasonable expectation that he would be capable of performing them in the foreseeable future, Katz advised Mr. Clarke that his employment had been frustrated.

In September 2013, Mr. Clarke’s counsel wrote to Katz that Mr. Clarke “has been working very hard to get well so that he can return to his former employment and perform the essential duties of his position.” In response, Katz requested updated medical information outlining Mr. Clarke’s estimated date of return and prognosis for recovery. Mr. Clarke failed to respond or provide the requested particulars. In December 2013, Katz requested these documents once again. In the absence of a response, Katz terminated Mr. Clarke’s employment. Mr. Clarke commenced an action for wrongful dismissal under the Ontario Human Right’s Code. Katz moved to have the claim dismissed summarily, and the judge dismissed the motion.

On appeal to the Divisional Court, the court found in favour of Katz and held that an employer’s duty to accommodate ends when the employee is no longer able to fulfil the basic obligations associated with the employment in the foreseeable future. If there is evidence that the employee’s disabling condition is permanent, the doctrine of frustration of contract applies.

While this case imposes limits on an employer’s duty to accommodate, those relying on this principle should be advised that there still remains a high threshold to demonstrate that a contract has been frustrated. Without proof that an employee will permanently be unable to discharge their duties, the court may well preserve the employee’s right to return to work despite a long absence.

[1] 2019 ONSC 2188

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The decision in Acadia University v Acadia University Faculty Association, 2019 CanLII 47957 serves as word to the wise and humble boaster that confidentiality provisions in a settlement agreement preclude all bragging rights. It also serves as a reminder to the carefully diligent counsel to draft agreements with clear and unequivocal confidentiality provisions.

In this case, the Acadia University Faculty Association filed grievances for the termination of a tenured professor. The parties voluntarily entered into a settlement agreement, which stipulated that this matter was resolved without any admission of liability or culpability on either side. The agreement also required the minutes be kept strictly in confidence. Following the settlement, the professor took to Twitter, tweeting, among other things, that he was “a vindicated former professor.” Arbitrator Kaplan ordered these tweets be deleted in compliance with the settlement, but the professor continued tweeting, this time about his “severance pay” being withheld.

The employer asked the arbitrator to decide whether these tweets breached the confidentiality provisions of the agreement. Arbitrator Kaplan determined that they had, and reasoned that words like “vindicated” and “severance” inferred wrongdoing on the part of the University, when this was specifically not the case. The Arbitrator explained that settlements in labour law are sacrosanct. Given the repeated and continuing breaches to the terms of the settlement, together with the absence of any mitigating circumstances, Arbitrator Kaplan held that the University was no longer required to honour the payment of the settlement funds.

This case showcases both the prowess and enforceability of clearly drafted confidentiality provision.

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Commit it to paper. Sign it. Seal it. Shake on it. This sums up the best practice to transact a contract in the legal community. Why? Because, the coveted realm within the four corners of a document is a confirmation binding one to their word.

With the Ontario Divisional Court’s recent decision in Shete, Lada, and Chung v. Bombardier Inc.,[1] however, it is now clear that verbal or unsigned agreements may be enforceable if there was a meeting of minds.

Bombardier terminated three employees, and offered them a termination package, with a Release precluding any future legal actions. The employees stated that they would accept the package if an additional $2,500 was added to each package to cover the cost of legal fees. Bombardier consented and returned the revised offers for the employees to sign. The employees never executed the offers. Two months later, the employees brought an action against Bombardier for wrongful termination.  Bombardier tried to dismiss the case by relying on the Releases.

The motions judge held the Releases were unenforceable because Bombardier’s revised offer constituted a new agreement that the employees had not accepted.

On appeal, the court ruled in favour of Bombardier, resolving that the Releases were enforceable even without the signatures of the employees. The court found that it was clear from the sequence of events that the parties had reached a settlement. The employees represented that they accepted the Releases conditionally, as long as Bombardier paid the additional $2,500 each. Bombardier conceded, and no other terms were added or modified; nor were any such requests made by the employees. Even though the employees may have reconsidered their position, an enforceable contracted existed nonetheless.

This case has opened up inquiries as to what now constitutes a preliminary agreement; at what point a contract is binding without a signature, and finally, what happens when there is a brief meeting of minds, but a party has reconsidered their position, thereafter? Until such questions are clarified, don’t throw caution to the wind: just get the signature.

[1] 2019 ONSC 4083

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