Court Ruling Warns Employers to Beware the Pitfalls of Flawed Failsafe Provisions
Summary
In Andros v. Colliers Macaulay Nicolls Inc., 2019 ONCA 679, the plaintiff Demetri Andros was terminated without cause by the defendant Colliers Macaulay Nicolls Inc. Mr. Andros’ employment agreement contained the following failsafe provision: The company may terminate the employment of the Managing Director by providing the Managing Director the greater of the Managing Director’s entitlement pursuant to the Ontario Employment Standards Act or, at the Company’s sole discretion, either of the following: a. Mr. Andros launched an action for wrongful dismissal, and argued that he was owed compensation per following: • benefits that he otherwise would have been entitled to during the reasonable notice period; and, • a bonus that he would have otherwise earned. The motion judge agreed with Mr. Andros and awarded additional damages on the basis that the failsafe provision was unenforceable. They are also reminded that failsafe provisions cannot be optional for employers, and that any covenants that restrict what employees are entitled to (provided that they do not fall below ESA minimums) must be made explicit. For expert guidance on correcting or crafting your organization’s failsafe provisions — and for all other support to ensure that your employment agreements are compliant with the law and consistent with the latest best practices — contact PIVOTAL today.