In the case Rahman v Cannon Design Architecture Inc, 2022 ONCA 451, the Ontario Court of Appeal (ONCA) determined that termination provisions in Ms. Rahman’s employment contract violated the Employment Standards Act (ESA). Additionally, they found that The Cannon Corporation and Cannon Design Ltd are common employers who are jointly and severally liable for any damages payable to Ms. Rahman.

Background

In early February 2016, Ms. Rahman attended a meeting with the Executive Director of The Cannon Corporation. After participating, Ms. Rahman was offered employment with the corporate group, CannonDesign. She was employed by them for over four years as Senior Architect, Principal, and Office Practice Leader.

The Cannon Corporation is a US parent corporation registered in Delaware. Cannon Design Ltd is a corporation registered in Toronto. Cannon Design Architecture Inc. (CDAI) is a subsidiary of The Cannon Corporation, incorporated in Canada.

Ms. Rahman signed two employment contracts: an Offer Letter and an Officer Agreement. The Offer Letter included a “just cause” provision stating that no notice or payment in lieu of notice would be given if there is just cause to terminate.

Ms. Rahman was terminated in April 2020 without notice and without cause. She received four weeks of termination pay. Subsequently, she brought an action claiming that she was entitled to a longer period of notice and damages for failure to provide such notice.

Ms. Rahman then moved for a summary judgment, asking the court to declare that the employment contract’s termination provisions were void because they violated the ESA. She also asked that Cannon Design Ltd and The Cannon Corporation be considered “common employers” of the contract.

The motions judge found that CDAI was Ms. Rahman’s sole employer and dismissed the action against The Cannon Corporation and Cannon Design Ltd. Furthermore, he found that the termination provisions in the contract were valid due to the parties’ subjective intentions to comply with the ESA as well as the fact that Ms. Rahman was sophisticated and obtained legal advice prior to signing the contract.

Appeal

On appeal, Justice Gillese finds that the motions judge erred in his conclusion that the termination provisions were valid and the corporations were not common employers.

On the issue of the termination provisions, she notes that the plain wording of the contract determines whether it violates the ESA, rather than any subjective intentions or considerations of the employee’s circumstances. In this case, the “just cause” provision in the Offer Letter stated that no notice or payment would be given if there is just cause to terminate. This contravenes the ESA, which stipulates that notice and termination pay must be given for all terminations, with an exception for “prescribed employees” listed in the act. This exception does not apply in this case. Affirming Waksdale, Justice Gillese finds that all termination provisions in the contract are accordingly void.

The ONCA further finds that The Cannon Corporation and Cannon Design Ltd. are common employers who are jointly and severally liable for damages. Justice Gillese relies upon several factual findings to support this assertion, including the parties listed in the written offer of employment and the administration of compensation.

Conclusion and Future Implications

For employers, this case demonstrates the importance of creating clear termination provisions that abide by the ESA. It further serves as a reminder that termination provisions will be read together when determining enforceability. For employees, this case affirms the legal protections and avenues that may be available when someone is terminated by their employer.