Lisa Talbot Tells Benefits Canada IBM's Failsafe "Met the Mustard"

July 19, 2018

Partner Lisa Talbot has spoken with Benefits Canada about the Ontario Court of Appeal’s decision in Amberer v IBM Canada Ltd., saying IBM’s failsafe provision in the employees contract “met the mustard.”

A small excerpt from the Benefits Canada story is below.

In this case, Noah Amberber had a written employment agreement with IBM. The contract contained a termination clause that entitled him to the greater of one month’s salary or one week of salary for every six months work to a maximum of 12 months’ salary, which expressly included all payments to which he was entitled under employment standards legislation.

In addition, the contract featured the following failsafe provision: “In the event that the applicable provincial employment standard legislation provides you with superior entitlements upon termination of employment (statutory entitlements) than provided for in this offer of employment, IBM shall provide you with your statutory entitlements in substitution for your rights under this offer of employment.”

IBM terminated Amberber’s employment, providing working notice and paying him 18 weeks’ salary amounting to $22,675. Amberber responded by suing for wrongful dismissal. He claimed entitlement to a reasonable notice period of 16 months, or $86,000.

As Amberber saw it, the contract was unenforceable because it violated or potentially violated the minimum standards legislation.

Lisa told the magazine the clarity of the contract was the key to the decision.

“This contract made it perfectly clear that if the formula for severance amounted to less than what Amberber could get applying the ESA, he would get the amount prescribed under the legislation no matter what,” Lisa said.

“The failsafe IBM used met the mustard. So don’t take any chances by departing from it.”

Lisa and her team have previously written about this issues, which you can read in “Applying Termination Clauses to Employment Agreements With “Failsafe” Provisions: Amberber v. IBM Canada Ltd.

To learn more about Torys’ Pensions and Employment Practice by heading to the practice page.

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