Ontario salesperson awarded full severance, termination clause ‘unenforceable’

Nassar v. Oracle Global Services ULC

In this case, the Ontario Superior Court of Justice (ONSC) ruled that Aftim Nassar, a sales representative at Oracle Global Services ULC (Oracle), was entitled to full severance pay after determining that the termination clauses in his employment contract were unenforceable.

Nassar was awarded five months of compensation after roughly three years of employment.

Facts of the case

• Nassar received a job offer from Oracle on February 14, 2018 and signed his employment contract six days later on February 20, 2022.
• On March 5, 2018, Nassar began working at the software company as an “Applications Sales Representative IV”. He was the only Canadian in this role.
• Oracle fired Nassar without cause on February 9, 2021. At the time of his termination, he was earning $120,000 in base salary plus commissions, benefits, and pension contributions.
• Nassar was informed that a termination clause in his employment contract would limit him to a minimum amount of severance mandated by Ontario’s Employment Standards Act (ESA).
• The ONSC ruled that the termination provisions in Nassar’s employment contract were unenforceable and that he was entitled to full severance pay under common law.

The Court’s Decision

The central issue in the case was whether or not the termination provisions in Nassar’s employment contract were enforceable.

The ONSC ruled the clauses weren’t enforceable and that Nassar was entitled to more than his minimum entitlements under the ESA.

As a result, he was awarded five months of compensation after roughly three years of employment at Oracle.

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Can’t violate the ESA

In Ontario, if an employment contract violates the ESA, any termination clauses that attempt to limit severance pay become void and the affected worker is entitled to full severance pay under common law.

This was the case in Waksdale v. Swegon North America. The Ontario Court of Appeal ruled that a termination clause was unenforceable based on specific language that the court considered illegal. As a result, the affected employee was awarded full severance pay.

While the “termination without cause” section of Oracle’s employment contract was compliant with the ESA, its “termination for cause” section wasn’t.

Even though Nassar was fired by the software company without cause, the ONSC found that parts of the contract violated the ESA, which made all termination clauses in the agreement unenforceable.

If Oracle’s termination provisions had been enforceable, Nassar would only be entitled to two weeks of compensation.

SEE ALSO
• ’60 days or more’: Is it an enforceable termination clause?
• Employment Law Show: 5 things to know about employment contracts

Not guilty of willful misconduct

The ESA only relieves companies in Ontario of their obligation to provide an employee with their minimum severance entitlements if the worker is guilty of “willful misconduct that is not trivial nor condoned by the employer”.

However, Oracle’s employment contract attempted to deny Nassar his minimum entitlements in circumstances that wouldn’t meet the requirements for willful misconduct under the ESA.

The ONSC found that the agreement tried to contract out of the ESA, which is illegal.

Key takeaways for employees

• Don’t accept an employment contract until you speak with a lawyer: When you receive an employment contract from a company, keep in mind that these agreements often take away key protections that would otherwise be available to you. In Nassar’s case, Oracle’s contract included termination clauses that tried to limit the amount of severance pay he could receive if the company fired him or let him go. Before signing, carefully review the agreement. If you are unsure about anything, an experienced employment lawyer at Samfiru Tumarkin LLP, can review it to ensure your workplace rights are protected.

Key takeaways for employers

• Ensure your employment contracts are compliant with the ESA: If your agreement violates the ESA, any termination clauses become void and unenforceable. If everything in Oracle’s employment contract was compliant with the ESA, the company would have owed Nassar two weeks worth of severance rather than five months’ pay under common law. If you aren’t sure if any clauses in the agreement violate the ESA, an experienced employment lawyer at Samfiru Tumarkin LLP can review the contract to ensure everything is compliant with Ontario’s employment standards legislation.

Lost your job? Speak with an employment lawyer

If you are fired or let go for any reason, contact the experienced employment law team at Samfiru Tumarkin LLP.

Our lawyers in Toronto and Ottawa can review your situation, enforce your workplace rights, and ensure that you receive the compensation you are owed.