In our practice as employment lawyers, it is not uncommon to see a contract, or job offer, referring to “permanent employment.” In reality, the employer usually intends to offer a job for an indefinite period of time (rather than permanently) and they have included a contractual provision within the terms of employment that contemplates early termination of the relationship.
It is important for employers to keep in mind, however, that the words in employment contracts have meaning. Moreover, where it is the employer that has drafted the contract and sought the requested terms, in the event of a later dispute over said terms, it is likely the courts will give effect to the logical, common sense meaning of the contractual language and interpret any ambiguity in the employee’s favour.
Quebec court reinstates employee with “job for life”
Last month, the Quebec Superior Court issued a precedent-setting judgment. In Gloutnay v. Rozon, 2022 QCCS 2578, Justice Marc Saint-Pierre ordered that a dismissed employee who had been guaranteed a “job for life” be reinstated to his role with full backpay. Effectively, the court found that the employer, through its representations, had undertaken to employ the plaintiff until he died, thus forfeiting the usual right to terminate the contract upon provision of notice.
The plaintiff had been employed with Just for Laughs Group for 25 years at the time of his dismissal. The employer chose to terminate his employment as it no longer required his services and issued 12 months’ salary by way of severance.
The plaintiff decided to bring a court claim seeking reinstatement on the basis that his employer’s founder and former president had guaranteed a job for life. The court determined that this guarantee had been made by the former president on behalf of the employer, and not in his personal capacity.
The court then reviewed the applicable evidence and concluded that the parties had intended to create a one-way guarantee of employment for life (i.e., the guarantee was only binding upon the employer and the plaintiff was free to leave the role at a time of his choosing).
In reaching this determination, the court rejected the defendant employer’s argument that the plaintiff’s position had been abolished and, as it no longer existed, reinstatement was an impossibility. The court instead found that by abolishing the position, the employer had breached its obligation to provide employment in the stated role for the duration of the plaintiff’s life.
Beyond that, the court ordered that the employer pay $20,000 in moral damages to the plaintiff for knowingly breaching its contractual obligation and causing the plaintiff to suffer mental distress as a result.
The case is significant as it is the first time that a Quebec court has ordered reinstatement in circumstances such as this. The decision is at odds with a long line of precedent opposed to the civil courts providing such a remedy. Accordingly, this decision may not be the end of the story. An appeal is likely and it will be interesting to see how the Quebec Court of Appeal grapples with this issue.
Takeaway for Ontario employers
The result in this case may seem improbable and unusual to many employers. That said, it serves as an important reminder that:
- All employers should carefully select the language they include in employment agreements, and to be careful in the representations they make to staff. Perhaps an employee may not be seeking a job for life but, depending on the promises made, the employer could take on additional and unintended obligations that increase costs or unanticipated operational hurdles.
For example, while not perhaps a job for life, there have been several court rulings addressing the significant liability unintentionally accrued where an employer has offered a fixed long-term period of employment and then elected to terminate the relationship early. In one such case, the employer ended a 10-year employment contract early and was ordered to pay almost $1.3 million in damages. - The courts will hold employers to their bargains (whether prudent or not), and in most circumstances apply the law in a way that best protects, and benefits, the more vulnerable non-drafting party (typically being the individual employee).
- Termination clause update: ousting the common law and the danger of fixed penalties - September 16, 2022
- Job for life is no joke for Quebec employer - August 12, 2022
- Statute trumps sophistication when determining severance rights - July 15, 2022
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