The court agreed with the employee
and held that the termination clause in
her employment letter was contrary to
law. The termination clause did not expressly
acknowledge that her benefits
would continue during the notice period
and was therefore contrary to sections
5(1) and 61(1) of the ESA. The court
pointed out that even though the employer
voluntarily continued the benefits
during the notice period, the termination
clause was still a nullity and therefore the
employee was entitled to common law
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However, in 2016, the Court of
Appeal in Oudin v. Centre Francophone
de Toronto upheld a motion judge’s determination
that a termination clause
that only referenced ESA notice but not
all benefits was nonetheless enforceable.
The motion judge found that there was
no attempt by the employer to contract
out of the ESA and that the parties had
agreed that the ESA would be respected.
In making this determination, the
motion judge considered the circumstances
of the parties, the words of the
agreement as a whole and the legal obligations
between the parties.
TAKEAWAY FOR EMPLOYERS:
As a result of these decisions, the enforceability
of termination clauses in
Ontario has become more complex.
Termination clauses are still commonly
used by employers in employment
contracts. However, as the case law indicates,
employers should ensure that
employment contracts and termination
clauses are drafted with a certain level
of specificity to ensure compliance with
minimum statutory requirements.
As proven recently, the failure to make
reference to all entitlements upon termination
is not necessarily fatal to the
enforceability of a termination clause.
However, it may be wise for employers
to err on the side of caution and ensure
that their termination provisions make
specific reference to providing all the
minimum entitlements under the ESA
upon termination. ■
Hendrik Nieuwland is a partner at
Shields O’Donnell MacKillop LLP.
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