Be mindful of the future with termination provisions

Ontario court decision finds termination clauses aren’t valid if they could violate employment standards in the future
By Anthony Lungu
|Canadian Employment Law Today|Last Updated: 07/06/2016

The Ontario Divisional Court has made a statement on the validity of termination provisions that follow employment standards minimums in the present but potentially violate those minimums down the line.

Claims from departing employees seeking damages for wrongful dismissal can be an expensive proposition for employers. To address this concern, employers have increasingly made use of contractual termination clauses in order to limit the amount of notice owing to employees upon dismissal. Such termination clauses allow employers to exercise a measure of control over the entitlements of a departing employee, typically limiting them to the minimum statutory notice and severance owing under provincial or federal employment standards legislation.

However, the law is clear that termination clauses cannot be used to defeat the statutory minimum entitlements owing upon termination. In other words, an employer cannot “contract out” of the requirements of the applicable employment standards legislation. Therefore, if a termination clause provides for something less than the statutory minimum entitlements, then that clause will be void and the employee free to seek additional notice at common law.