Employment lawyer David Whitten discusses two of most important contract cases in Canada
The legal landscape of employment agreements in Canada continues to evolve, presenting challenges for employers and employees alike. For David Whitten, partner at Whitten and Lublin Employment Lawyers, there are two key cases that have captured lawyers attention of late: Adams v. Thinkific Labs Inc. and Egan v. Harbour Air Seaplanes.
As he explains, it’s these two cases that really illustrate the critical importance of precision in employment agreements and highlight persistent challenges in contract enforceability.
“The Adams decision really is just a restatement of what we knew already,” Whitten explains, emphasizing that foundational contract law principles remain steadfast. At the heart of the case was a common mistake: presenting additional employment terms after the job offer had already been accepted.
“In order for there to be an enforceable employment agreement with the severance provision or non-competition clauses, the employer has to demonstrate that the person had it in hand before they accepted the position,” Whitten explains. Because, without this, the agreement lacks the consideration—value exchanged between parties—that is essential for a binding contract.
Here, Whitten critiques the employer’s approach in Adams as a “classic case of undisciplined employer behaviour.”
“The employer sent a bare-bones offer letter, which included salary and vacation terms, but no mention of a follow-up agreement. When the employee signed it, the consideration was already complete. Later that day, they asked her to sign a more detailed agreement with restrictive covenants, but she received no new value for doing so.”
According to Whitten, this was “contract law 101” and underscores a broader trend of procedural missteps by employers.
The Egan v. Harbour Air Seaplanes decision offers a different perspective. Here, the courts upheld a straightforward severance provision tied to the Canada Labour Code, a rarity in recent years.
“The Egan decision was a breath of fresh air for employers,” Whitten added. “The provision simply stated that, if terminated without cause, the employee would receive severance as per the Canada Labour Code. This was found to be enforceable, rebutting the common law presumption of longer notice periods.”
However, Whitten is quick to temper expectations.
“This is not a watershed moment for the rest of the country, particularly for provincially regulated employers.” He points out that provincial employment standards often differ significantly from the federal Labour Code.
“In Ontario, for example, the Employment Standards Act has no concept of ‘cause.’ This distinction has led courts to strike down severance clauses that do not comply with the legislative framework.”
Shifting to non-compete and non-solicitation clauses, Whitten emphasizes the importance of jurisdiction-specific considerations.
“In Ontario, non-competition clauses for non-C-suite roles are, with rare exception, unenforceable by law,” he explains. “It’s crucial to avoid blanket provisions and instead tailor restrictions narrowly. Non-solicitation clauses, on the other hand, can still be enforceable, if they are reasonable in scope and duration.”
Whitten provides practical advice for employers looking to draft enforceable clauses: “Ask yourself, does it really make sense to restrict someone for more than a year or more? Courts are unlikely to enforce longer provisions outside of commercial contexts. Similarly, instead of applying the restriction to all customers, focus on clients the employee worked with in the last 12 months.
“If you say the restriction applies to every customer the employee interacted with over a 10-year career, that’s not going to fly. Courts look for proportionality and fairness.”
On the topic of offer letters versus formal employment contracts, Whitten is unequivocal: the distinction is largely one of semantics.
“An offer letter is a contract if it spells out employment terms,” he says.
“What matters is that the agreement is clear, compliant with applicable laws, and provided to the employee before they accept the job. People think an employment contract needs to be overly legalistic or lengthy. It doesn’t. Some of the most effective contracts I’ve seen are just a few pages long, written in plain language. Simplicity helps avoid disputes and makes it easier to attract talent.”
Termination provisions and severance clauses are another area fraught with litigation.
“This is a pet peeve of mine,” Whitten admits. “Ontario courts have consistently invalidated severance provisions, forcing employers to pay common law notice, which can reach 24 months or more. This makes Canada less attractive to global businesses.”
Whitten believes the judicial approach to severance clauses has done a disservice to employers.
“By invalidating these provisions, courts have created uncertainty. Employers can’t quantify their severance liabilities when restructuring, which raises costs and discourages investment.”
And, to mitigate risks, Whitten advises employers to adopt clear, unambiguous language that aligns with legislative standards. However, he acknowledges the challenges of securing employee buy-in: “Most mid- to senior-level employees won’t agree to clauses limiting them to statutory minimums. Employers need to offer something more robust to ensure enforceability.”
Throughout these discussions, Whitten underscores the value of clarity and discipline in employment agreements.
“If you want to avoid litigation, the solution is simple: draft agreements that are concise, compliant, and provided to employees before they start work,” he says.
Because, in a legal environment where ambiguity favors employees, precision is the best defense for employers navigating Canada’s complex employee friendly employment laws.
