• Ontario’s Superior Court of Justice held that because a termination for cause provision in an employment contract defined “cause” more broadly than does the Employment Standards Act, 2000 it was unenforceable.
• Court also held the employer failed to prove the employee did not mitigate her damages.

In De Castro v. Arista Homes Limited, 2024 ONSC 1035, Ontario’s Superior Court of Justice (Court) held the termination provision in an employment contract was unenforceable because it defined “cause” more broadly than does the Employment Standards Act, 2000 (ESA), which articulates limited circumstances in which an employee can be dismissed without notice or pay in lieu of notice. The Court found also that the employer did not meet its burden to prove the employee failed to mitigate her damages because it did not offer any help with her job search (e.g., reference letter, leads, job counselling) or provide any evidence of comparable positions to which she should have applied.

Background

The employee was employed in a managerial position as décor store manager for five years when her employment was terminated without cause in October 2020, at the height of the Covid pandemic. At that time, the employee’s annual salary was $80,000 plus benefits and she received an annual bonus of $5,000. She was 49 years old.

The termination provision in the contract provided:

If you are terminated for Cause or you have been guilty of wilful misconduct, disobedience, breach of Employment...

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