Canadian Employee Secondments: Not “Temporary” Employment Agreements
In a number of settings, workers are assigned to work with or for a different employer for a temporary period of time. Often these are described as a “transfer”, “secondment” or “loan” of the employees. When implementing any such arrangement, it is very important that the employer(s) closely review the exact nature of the arrangements, which are often legally characterized in a manner which is different from the expectations of employees.
A recent Ontario Court decision closely reviewed the terms of a secondment agreement, and found that the employee was not engaged as a temporary or fixed-term employee of the organization where he had been seconded. The decision in Nader v. University Health Network, 2022 ONSC 447, involved a claim by an executive whose employment and secondment were terminated, and then claimed damages against both his “home” employer, University Health Network (UHN), and the organization where he was seconded, Ontario Health.
In its decision, the Court held that employees who are seconded are not able to “double collect” damages for both the termination of the secondment and the termination of the underlying employment relations. Instead, the rights of employees will be limited to whatever is prescribed in relevant agreements, which will not necessarily give rise to any claims under a secondment agreement.
Mounir Nader was employed by UHN as Executive Vice President, Clinical Operations commencing September 6, 2016. The terms of his employment with UHN were provided for in a signed offer letter from UHN (the “UHN Employment Agreement”). The UHN Employment Agreement contemplated UHN employing Nader on an indefinite basis, with a 12-month notice obligation in the event of a termination without cause.
Starting in July of 2019, Nader was seconded for a two-year term to a role with Ontario Health. This arrangement was documented in the form of a Secondment Agreement, which provided that Nader would remain an employee of UHN during the term of the secondment. Prior to the Secondment Agreement being signed, UHN advised Nader that his role at UHN may not be available to him at the end of the secondment with Ontario Health. As a related point, UHN hired another person to fill Nader’s role for the duration of the secondment.
One year into the secondment, Ontario Health advised Nader that the secondment would end the following month. UHN proceeded to review its staffing needs, and advised Nader that it did not have a role for him. As a result, UHN provided notice of termination of the employment at the end of the term of the secondment agreement. They proceeded to rely upon the 12-month notice provision in the UHN employment agreement.
In his lawsuit, Nader claimed that the secondment agreement was a form of two-year fixed term contract with Ontario Health. As a result, he claimed that he was entitled to be paid for the balance of the term of the secondment (one year), plus the termination amounts in the UHN Employment Agreement.
The Court rejected Nader’s claim based on a close and careful review of relevant documentation, including the secondment agreement. There was not a guaranteed two-year term as alleged, and Nader himself has signed an agreement which clearly stated that the secondment’s anticipated two-year term was “subject to early termination”. There was, therefore, not a two-year fixed term contract, and instead the rights and obligations were as set out in the UHN Employment Agreement. In particular, upon termination of the secondment agreement upon notice from Ontario Health, Nader would: (1) revert to employment as determined by UHN; and (2) remain subject to the provisions of the UHN Employment Agreement, including the applicable 12-month notice provision.
Takeaways for Employers
This decision highlights the importance of clear language in employment agreements and related documents, which are required to demonstrate the intention of the parties. Employers have the onus of demonstrating what rights employees do and do not have. If there is unambigiouos language which delineates the rights to end an assignment or secondment, the courts will be far more likely to uphold the relevant termination provisions. In the case specifically of secondment agreements, it is important that the employee remains an employee of the “home” employer, with any rights upon termination limited to the provisions which would apply without reference to the secondment. With this type of wording in place, employers will have a strong defence to efforts to claim damages against both the organized they are seconded to and the party who remains their employer.