Court punches holes in poorly worded employment contract

Termination provisions attempted to limit reasonable notice
|employmentlawtoday.com

An employment contract designed to limit reasonable notice to one month upon termination without cause did not stand up to a court’s scrutiny because of poor wording.

In

Singh v. RSL Canada Inc.

, the Ontario Superior Court of Justice found the termination provisions in the employment contract did not limit the notice period. The provisions were as follows:

“Your employment and this agreement, including all benefits provided for under this agreement will terminate on the following a) the acceptance by the Corporation of your voluntary resignation and notice period as described below, b) Your dismissal for ‘just cause’ under common or statue (sic) law or by reason of your breach of the terms of this Agreement, or c) dismissal for reasons other than just cause, upon notice or pay in lieu of notice and any applicable severance pay.

“At this is a very significant position within the organization, and an important step in your career, our expectation is that, you will provide us with one month’s written notice of intention to terminate and RSL Canada Inc. in consideration will also provide one month written notice of termination or payment in lieu thereof.”

RSL Canada, which prepared the agreement, told the court the provisions, properly construed, require it to give David Singh one month written notice of termination or payment in lieu thereof if it terminated him without just cause.

But Singh said the provision for one month’s notice is triggered when he voluntarily resigns from his employment. Singh argued that in the contract resignation was the only form of termination linked to the one month notice requirement.

Even if the court didn’t agree, Singh said the termination provisions were at best unclear and, in such a circumstance, the court should construe the contract in the employee’s favour.

The court’s decision

The court found the contract was worded in a way that the only manner of termination linked to the one month notice requirement was resignation.

It went on to say that even if it was wrong in that interpretation, Singh’s second argument — that it was at best unclear and should be construed in his favour — was a strong one.

“If I am wrong in that interpretation, I agree with the plaintiff that the agreement is unclear and should be construed in favour of the plaintiff,” said Justice Romain Pitt in the decision.

The court said the termination provisions do not rebut the common law presumption in favour of reasonable notice.

For more information see:

Singh v. RSL Canada Inc.

, 2005 CarswellOnt 247 (Ont. S.C.J.)

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