Ramotar v. Trader Corporation: Termination Clause Illegal for Limiting Insurance Coverage during ESA period

In this precedent-setting Toronto Small Claims Court decision in which I acted for the plaintiff, Ramotar v. Trader Corporation (Court File No.: SC-23-00002856-0000), (unreported), the termination clause contained the words “provided such coverage is available from the insurer” in connection with benefits over the statutory notice period.

I argued this was an illegal provision that failed to comply with the mandatory nature of benefits [premiums] continuance or pay in lieu under Sections 60(1)(c) and (3) of the Employment Standards Act, 2000 (the “ESA”) and that a case, Alarashi v. Big Brothers Big Sisters of Toronto, 2019 ONSC 4510 (CanLII) at paras. 29-34, released in 2019, which included identical language and found that the wording did not infringe the ESA, was bad law and/or distinguishable.

Deputy Judge K. Qureshi agreed and held that it is unlikely that Alarashi would be upheld today since the Alarashi decision predated Waksdale v. Swegon North America Inc., 2020 ONCA 391, which was released in 2020, and which held that if any part of a termination clause is illegal under the ESA, the entire clause is unenforceable.

In Ramotar v. Trader Corporation, the termination clause stated in part:

“In the event that it becomes necessary to terminate your employment without cause, either before, during or after the probationary period, the Company will provide you with such notice (or payment in lieu of notice), severance pay, if owing, accrued vacation pay and any other compensation or benefits that may be required to meet the requirements of the Employment Standards Act, 2000.

If your employment is terminated without cause, the Company will continue your group insurance benefit coverage for such period as the Employment Standards Act, 2000 shall require, provided such coverage is available from the insurer.”

            …

Deputy Judge K. Qureshi held:

When interpreting an employment agreement, all termination provisions must be read together, and the invalidity of one termination provision renders all termination provisions void and unenforceable.

Specifically, the first paragraph explicitly and specifically tells employees that upon termination they will get their notice or payment in lieu, severance, and vacation. However with respect to anything else, the paragraph just uses a generic phrase, “any other compensation or benefits”, without explaining what these are, even though vacation and severance are specifically mentioned.

The first paragraph is then followed by a second paragraph which now specifically talks about benefits saying, “If your employment is terminated without cause, the Company will continue your group insurance benefit coverage for such period as the Employment Standards Act, 2000 shall require, provided such coverage is available from the insurer.”

The way these two paragraphs work together sounds as though in order to understand what any other compensation and benefits in the first paragraph means, you have to look to the second paragraph for an explanation or details. However, as indicated, the second paragraph only refers to group insurance benefits.

I find the two paragraphs in conjunction would reasonably convey to an employee that the words, “any other compensation or benefits”, in the first paragraph are circumscribed by the second paragraph to just mean group insurance benefits. In turn this would convey to an employee that they would not be entitled to other types of compensation benefits on termination. For example, pension, life insurance, retirement savings benefits, even though they are. Furthermore, I agree with the plaintiff that the words, “provided such coverage is available from the insurer”, in the second paragraph sounds like another further limitation on the words in the first paragraph, “and any other compensation or benefits.”

I find the way the second paragraph reads, is that such group insurance benefits would only be available if there is coverage notwithstanding that an employee would still be entitled to payment in lieu thereof.

While I acknowledge Alarashi v. Big Brothers Big Sisters of Toronto, 2019 ONSC 4510 did not find anything wrong with this statement, that case was from 2019. I find in…[a post-]Waksdale v. Swegon North America Inc., 2020 ONCA 391 [world], the termination provision phrase creates ambiguity in the employment contract and it’s unlikely that the provision in Alarashi would still be upheld today.

The Ramotar v. Trader Corporation decision on reflection:

Alarashi has been generally regarded as a decision highly favourable for employers.

For over five years, the provision relating to ‘coverage availability’ in Alarashi had gone unchallenged, and many employment contracts have continued to be replete with similar if not identical boilerplate.    

One reason for this is because it is difficult to overturn a decision like Alarashi. Some plaintiffs may have viewed challenging the decision as inherently risky, may not have had the opportunity to do so, or may have abandoned the argument prior to trial in favour of greener pastures within the termination clause.

The absence of litigation benefited employers.

Ramotar v. Trader Corporation sets the tone in 2025 by not only taking Alarashi head on, but also demonstrating the changing analysis in the courts relating to these and other new arguments that can be made to challenge termination clauses. In my view, here are some reasons Alarashi is bad law and/or distinguishable in a post-Waksdale world:

-            The words “shall continue” are the greatest evidence of the Provincial Parliament’s intent in drafting s. 60 that benefits [premiums] continuation (or pay in lieu) be mandatory, not permissive; 

-            Section 60(1)(c) of the ESA must be read in conjunction with 60(3), since if benefits are not available 60(3) contemplates pay in lieu is required;  

-            Cormier v. 1772887 Ontario Limited (St. Joseph Communications) 2019 ONCA 965, (which came after Alarashi even though Alarashi distinguished the lower-court’s decision in Cormier) at para. 16 refers to an employer continuing “all benefits”;

-            Allowing employers to abrogate or contract out of their ESA obligations for benefits [premiums] continuation or else pay in lieu by making group insurance benefit coverage subject to insurer “availability” would not be unlike a clause that absurdly purports to abrogate or contract out of an employer’s obligation to provide mandatory ESA termination pay or unpaid wages upon termination as being subject to the solvency of the defendant’s preferred bank;

These arguments and others were made at trial in closing argument.

The Ramotar decision gives the employment bar a creative way to attack termination clauses by showing not only how a termination clause can be read together (and if any part runs offside the ESA the entire clause is invalid) but how one paragraph can open up a right only to have that right circumscribed by another paragraph.  As Tatha Swann of SWANN LAW has written in connection with the Ramotar decision, "Under s. 60 of the ESA, Ontario employers must continue benefits contributions during the minimum statutory notice or risk liability for uncovered losses."

Therefore, regardless of the language of the employment contract, if an employer fails to make the necessary premium payments and as a result the employee incurs a loss that would have been covered, the employee can pursue a civil claim against the employer for that loss, apart from any wrongful dismissal claim.

The Ramotar v. Trader Corporation decision is a big win for employees, since, in a post-Waksdale and post-Dufault world, employers have tightened up their termination clauses, leaving less to litigate.

The relevance of the Ramotar decision is it shows a shift in litigation over termination clauses for plaintiffs at a time where the recently released decision in Bertsch v. Datastealth Inc., 2025 ONCA 379 (CanLII) has given employers a model ESA clause (at least, until it is not so), in a post-Waksdale world and which has the Court of Appeal’s seal of approval. At the same time, Ramotar is paving the way forward in the attack on the benefits front, I expect many plaintiff-side counsel (including myself) will be on the hunt within the entire employment agreement for all things concerning benefits.

Some employer-side lawyers have viewed para. 10 of Waksdale as saying only the termination provisions should be read as a whole, but this is not what Waksdale says. Waksdale says “An employment agreement must be interpreted as a whole and not on a piecemeal basis…In conducting this analysis, it is irrelevant whether the termination provisions are found in one place in the agreement or separated, or whether the provisions are by their terms otherwise linked.” Many employment contracts will have boilerplate that purports to give the employer, under a benefits clause, the power ‘at any time and from time to time modify, the benefits plan at its sole discretion, without any obligation to replace any modified, suspended or discontinued benefit with any other benefit, equivalent or otherwise, or otherwise compensate you in respect thereof.’

If the Datastealth clause becomes widespread, apart from litigating any misplaced comma or use of the singular versus plural when it comes to benefits, plaintiff-side lawyers may be on the hunt to use the real estate of one area of an employment contract (e.g. the benefits clause) to challenge another area (e.g. the termination provisions). This was done in Ramotar although Her Honour's decision focused only on what was determinative. In this respect, the right opened up in the termination clause over benefits may be circumscribed by the benefits clause found elsewhere in the employment agreement but 'benefits' is a term "otherwise linked".

Meantime, plaintiff-side counsel will have lots of grist for the mills of litigation while we await how the Datastealth clause, imported into other employers’ agreements will be challenged or worked around in the future (either through targeting the benefits clause or perhaps under a novel Machtinger-type argument) as companies adopt that clause. This blog does not constitute legal advice and is not intended to be a summary of the law relating to termination clauses. Every situation must be assessed independently. If you have been wrongfully dismissed or are seeking advice relating to a severance package being offered, please do not hesitate to contact me for a consultation: info@cuttresslaw.com A copy of the Ramotar v. Trader Corporation decision can be downloaded here:

Amrika Ramotar v Trader Corporation - Reasons for Judgment - 2025 JANUARY 15.pdf

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