Does the employee’s level of contract knowledge make a contract more enforceable? Who is on the hook for termination pay if a company has subsidiary or parent companies?
The Ontario Court of Appeal recently answered these questions in Rahman v. Cannon Design Architecture Inc. The bottom line of the decision is:
- an employee’s level of sophistication has no bearing on whether a termination clause is enforceable
- the language in with-cause termination provisions needs to be carefully worded and abide by requirements in the Employment Standards Act (“ESA”)
- subsidiary and parent companies of an employer can be considered “common employers” if there is a certain level of integration between the companies, making them jointly and severally liable to the employee.