2024 got off to a bang in the world of employment law. In a recent trial level decision, an Ontario judge has found yet another termination clause illegal and unenforceable. In so doing, the court accepted an entirely novel argument for why termination provisions may be read as impermissibly contracting out of the mandatory requirements of the Employment Standards Act, 2000 (the “ESA”).
One of the issues we commonly encounter, when speaking with both individuals and employers, is whether the language in their employment contract addressing termination is enforceable.
For employees, where a termination provision is unenforceable, it can mean they have an entitlement to increased severance. Whereas for employers, if the clause does not hold, it can create uncertainty and result in unintended liability.
We are not long into 2019 and yet one thing already seems clear – the law concerning employment contract termination clauses will continue to be the focus of a great deal of litigation in Ontario. In just the past few months alone, new decisions from the Superior Court have helped to advance the law and provide further guidance to employers on proper drafting of termination clauses.
Vey Willetts LLP was recently successful in defeating a summary judgment brought by IBM Canada Limited. This decision, Amberber v. IBM Canada Limited, serves as an important reminder to employers of the need to draft contractual termination clauses with a high degree of clarity, or risk unanticipated liability in the event of a without cause dismissal.
