Costly error: Bank found liable for common law reasonable notice, annual bonuses
In employment contracts, the instinct to provide clarity and detail in termination provisions can backfire dramatically.
That’s what happened to the Canadian Imperial Bank of Commerce (CIBC) when an Ontario court determined that the termination provisions of two dismissed employees were unenforceable, leaving the bank liable for common law reasonable notice and annual bonuses.
For senior HR leaders and in-house counsel crafting employment contracts, the decision offers both a cautionary tale on how courts across Canada are increasingly willing to strike down termination provisions that fail to meet evolving legal standards around clarity and enforceability, according to Charles Millar, an employment lawyer at Achkar Law in Toronto.
The case involved two mobile investment consultants in CIBC's retail banking operation. In September 2022, both workers were given notice that their employment would be terminated effective Oct. 7. The first worker was 54 years old with 5.5 years of service and the second worker was 38 with 4.5 years of service.
CIBC provided four weeks of working notice plus statutory severance payments under the Canada Labour Code (CLC), believing it had fully satisfied its legal obligations. Both workers sued for wrongful dismissal, arguing that they were entitled to common law notice of termination because the termination clauses in their employment contracts — which were the...
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