A New Precedent for ESA Minimums: No Common Law Guarantees
While an employment agreement may state that an employee is only entitled to minimum payments and entitlements under the Ontario Employment Standards Act, 2000 (the “ESA”), employees can argue for their right to common law damages for wrongful dismissal. This is often done by asserting that the termination clause is void and unenforceable: reasons include that it is unclear, or allows the employer to terminate without providing proper notice or pay in lieu of notice.
Common law, (which is law made up by judges) notice may entitle employees to around 3 to 6 weeks’ notice (or pay in lieu of notice) per year of service, rather than the minimum written into their contract (see this article). However, the recent case of Bertsch v Datastealth may make it easier for employers to enforce their ESA-minimum clauses, and reduce the accessibility of common law remedies.
Bertsch v Datastealth and the Employer’s Termination Provision
In the 2025 decision Bertsch v Datastealth Inc., the plaintiff was a vice-president at the defendant company for approximately 8.5 months, and earned an annual salary of $300,000, before he was terminated without cause and with 4 weeks’ pay in lieu of notice. He alleged that his employment contract, specifically the paragraph that addresses the amount of notice for termination, violates the ESA, and that he was owed 12 months’ pay under common law. When his lawsuit was dismissed by the Ontario Superior Court of Justice on a motion, the plaintiff ppealed.
The Ontario Court of Appeal (the “Appellate Court”) dismissed the plaintiff’s appeal that his termination clause, which provided less notice than his common law entitlements, was invalid. The contract’s terms included that upon termination, the employee would “be provided with only the minimum payments and entitlements, if any, owed to you under the [ESA] and its Regulations”, and that said compliance “satisfies any common law” entitlement.
The plaintiff argued that the contract was unenforceable for not clarifying his entitlement to statutory notice or severance. The motion judge rejected this argument, finding that there was no unclearness in the clause and no “reasonable interpretation” that its wording was contrary to minimum ESA requirements. As the termination provision was clear and unambiguous in ousting common law notice, and did not violate the ESA when reasonably interpreted, it was enforceable.
Striking Out a Lawsuit (Rule 21.01) CanbBe Used to Determine the Validity of a Termination Clause
In the original Bertsch decision from 2024, the employer (defendant) used Rule 21.01 of the Rules of Civil Procedure to dismiss the plaintiff’s claim for having no tenable cause of action. Under Rule 21.01, there is no need to proceed to trial where there are no disputed facts or additional evidence that would warrant a trial. Because the termination clause in Bertsch was deemed to be clear and unambiguous, Rule 21.01 could be applied at the very outset of the litigation to prevent the proceedings from dragging on unnecessarily.
While the plaintiff argued in his appeal that the motion judge’s application of Rule 21.01 was erroneous, the Appellate Court concluded that the termination clause was not overly confusing, as it clearly stated that an employee would receive minimum ESA entitlements whether they were terminated “with or without cause”. It is true that a clause could be reasonably interpreted in multiple ways, and that courts tend to favour an interpretation that benefits the employee (see the contra proferentem principle and Amberber v IBM Canada Ltd), but there must be true ambiguity that goes beyond two sides merely having different perspectives.
A Reasonably Interpreted Clause Can Preclude Common Law Damages Claims
Since it was held that the termination clause in Datastealth was clearly worded in a way that allowed for a reasonable interpretation, it could not be said to violate the ESA minimum standards. In other words, when there is no ambiguity in the termination clause, an employer is under no obligation to provide common law notice beyond what the ESA provides.
Further, the ambiguity question is not determined by how a layman might interpret the clause: it comes down to the explicit phrasing of the clause, and whether an alternate reading would require ignoring those words. The employment agreement specifying that only ESA minimums would apply meant, in the Court’s eyes, that it was properly drafted and that the plaintiff had no grounds for seeking common law damages.
How will this affect the Employer-Employee Relationship?
Bertsch’s decision reiterates the principle that employers must draft their employment contract an eye for detail. Going forward, it sets a precedent that precisely worded contract clauses can limit an employee’s ESA entitlements and ability to make common law claims.
If you are an employer and you require assistance with employment contracts, or wish to prevent claims being made against you by ex-employees, please reach out for a consultation with one of our experienced employment litigation lawyers.
Tags: Employment Litigation Law, Civil Litigation Law, Appeals.