By Stephen Dugandzic
In Nader v University Health Network, 2022 ONSC 447, the Ontario Superior Court addressed the legal implications of secondment agreements within the framework of existing employment contracts.
Background
Mounir Nader began his employment with the University Health Network (UHN) in 2016 as Executive Vice President. His employment agreement stipulated that UHN could terminate his employment without cause by providing 12 months’ salary in lieu of notice.
In 2019, Nader entered into a two-year secondment agreement with Ontario Health, during which he would serve as Interim Chief Transformation Officer. The secondment agreement explicitly stated that Nader would remain an employee of UHN throughout the secondment period. It also included a clause indicating that the secondment was “subject to early termination in accordance with this agreement.”
Approximately one year into the secondment, Ontario Health terminated the secondment early. UHN, having filled Nader’s original position during his secondment and unable to find a comparable role for him, terminated his employment without cause, providing him with 12 months’ salary and benefits as per his employment agreement.
Legal Issues
Nader contended that the secondment agreement constituted a fixed-term contract, entitling him to compensation for the remaining term of the secondment in addition to the severance provided under his employment agreement.
Court’s Analysis and Decision
The court rejected Nader’s claim, emphasizing the following points:
• Nature of the Secondment Agreement: The court determined that the secondment agreement was not a standalone employment contract but rather an arrangement within the existing employment relationship with UHN. The agreement explicitly stated that Nader would remain a UHN employee during the secondment period.
• Termination Provisions: The secondment agreement included a clause allowing for early termination, indicating that the two-year term was not guaranteed.
• Compensation Entitlement: Given that Nader’s employment agreement with UHN provided for 12 months’ salary in lieu of notice upon termination without cause, and considering the secondment agreement did not establish a separate employment relationship with Ontario Health, Nader was not entitled to additional compensation for the unfulfilled portion of the secondment.
The court concluded that Nader could not “double collect” damages for both the termination of his employment and the early termination of the secondment. He was entitled only to the severance specified in his employment agreement with UHN.
Key Legal Principles
• Secondment Agreements: Such agreements, when clearly stating that the employee remains under the original employer’s purview, do not create separate employment relationships with the host organization.
• Fixed-Term Contracts: The presence of an early termination clause in a secondment agreement undermines the characterization of the agreement as a fixed-term contract.
• Severance Entitlements: Employees are entitled to severance as outlined in their primary employment contracts, and cannot claim additional compensation from secondment agreements unless explicitly provided for.
Practical Implications
This case underscores the importance of clear and unambiguous drafting in employment and secondment agreements. Employers should ensure that secondment agreements explicitly state the nature of the employment relationship and any termination provisions to avoid potential disputes.
*Always seek legal advice. The above is for information purposes only.
Stephen Dugandzic received his Juris Doctor degree from the University of Alberta in 2013 and is Calgary-based. He previously practised with Bennett Jones LLP and Taylor Janis LLP before founding YYC Employment Law Group in 2018.