The recent Ontario court case of Giacomodonato v PearTree Securities Inc., 2023 ONSC 3197 involved a few important legal principles, including the legal enforceability of an employment contract.
This case involved an employee who was employed as President of the company. Following his termination, he sued the employer for wrongful dismissal. In turn, the company countersued him alleging he violated restrictive covenants in his employment contract when he went to work for a competitor 9 months after his employment was terminated.
In its decision, the court awarded the employee with a proper severance package, dismissed the employer’s counterclaim and found the non-competition and non-solicitation clauses were overly broad and unenforceable. Most significantly, this case discussed the legal concept of “fresh consideration” for termination clauses in employment contracts. Specifically, the court held that fresh consideration can be, for instance, a relatively modest signing bonus, or more annual vacation. In the court’s view, its role is not to analyze the value of the consideration, just the existence of it:
“Courts ensure that there is consideration for the contract, but the court is not concerned with the adequacy of the consideration. As long as there is some consideration for the amendments to the contract, the court leaves it to the parties to form their own judgment over its adequacy and to make their own bargain. The law does not require that the new benefits be in the form of money, or that the economic value of the new benefits provided to the employee equal or exceed the economic cost of the new terms of the agreement…
It is not role of the court to assess the adequacy of the consideration provided by PearTree or to assess whether or not the economic benefits obtained by Mr. Donato outweigh what he gave up. I observe, however, that neither two additional weeks of paid vacation nor $40,000 can be fairly described as a mere peppercorn.“
Call Employment Lawyer Toronto Today
If you are an employee who believes you were wrongfully dismissed from your employment with or without a fair severance package, call today to discuss your options. As an employment law firm in Toronto, Bune Law has reviewed and negotiated improvements to many severance packages. You will review and get guidance on your severance package before you agree to sign any termination documents, and help ensure that your severance package is fair and reasonable.