Court upholds agreement enforcing fixed term contract for a 25 year employee
October 27, 2015
The Employee began working for Sony of Canada Ltd. (the “Employer”) on June 9, 1989. His employment was terminated on March 31, 2015 just prior to his 26th anniversary of continued employment with Sony. As at the termination date, the Employee was 45 years old working as the Director of Sales in the Professional Solutions Group. He held a high level position in Toronto managing several employees with an impeccable service record.
In the spring of 2014, the Employee advised his supervisor that he intended to move to Ottawa. He requested to work remotely from Ottawa based on a telecommuting structure managing his employees based in Toronto. Sony did not have an office in Ottawa and was not in favour of the proposal for a director-level employee working remotely in another city.
Despite initial disapproval, Sony was prepared to accommodate the Employee’s request to work remotely on the condition that his position change from indefinite employment to a contract position with a fixed term.
The fixed term agreement was negotiated for a period of approximately 1 month. The Employee had ample opportunity to seek independent legal advice. The Employee was unable to negotiate and preserve his existing rights to severance and termination pay as a longstanding 25 year employee. He also accepted lesser entitlement to vacation pay and a non-competition clause in the fixed term contract which was to expire on March 31, 2015, unless renewed.
Unfortunately, the Employer undertook a major re-organization of its North American operations which culminated in significant lay-offs in February 2015. The Employee’s fixed term contract was not renewed after March 31, 2015. As the fixed term agreement was completed, the Employer took the position that the Employee was not entitled to termination pay after the cessation of the contract.
The Employee commenced legal proceedings arguing, among other things, that his fixed term employment agreement was void and lacked consideration. The Employee brought a motion for summary judgment seeking termination pay predicated upon his 25 year employment tenure.
While sympathetic to the Employee’s ‘’plight’’, the Court enforced the fixed term contract holding that there was ample consideration for the fixed term contract. Specifically, Sony permitted the Employee to perform his prior duties from Ottawa with only occasional physical appearance in Toronto. Even though the fixed term contract had a provision which permitted the Employer to terminate the agreement on thirty days’ notice, which would violate the minimum standards for termination pay prescribed by 57(h) of the Employment Standards Act (“ESA”), this option was not exercised, and therefore had no bearing on the enforceability of the contract.
This case is significant because it demonstrates the importance that employees obtain legal advice before signing or revising an employment agreement which can fundamentally alter their rights and entitlement upon termination.
Riskie v Sony of Canada Ltd., 2015 ONSC 5859 (CanLII) (SCJ)