What You Need to Know about Termination Clauses in your Contract

Written By:  Rodney Jackson

Posted: June 4,  2024   3 minute read

In Ontario, common law - the body of law formed through judicial rulings which significantly influences the development of employment practices and principles. Recent court rulings have brought significant changes and clarifications to various aspects of employment law in the province. These developments are vital for both employers and employees as they navigate their rights and responsibilities in the workplace. Here’s a brief look at some of the key recent common law changes in Ontario employment law.

Termination Clauses and Notice Periods

One of the most impactful areas of recent common law developments involves termination and notice periods. Courts have been increasingly attentive to the context of each employment relationship, resulting in significant rulings on reasonable notice periods.

• Case Example: Waksdale v. Swegon North America Inc., 2019 ONSC 5705

In this landmark decision, the Ontario Court of Appeal held that if any part of a termination clause in an employment contract is voided, the entire termination clause is unenforceable. This case emphasized the critical importance of having a carefully drafted termination clause that complies with both statutory and common law requirements.

• Employer Implications: Employers must review and possibly revise their employment contracts to ensure all termination clauses are enforceable. If one termination clause is found to be unenforceable all other clauses within the termination section may be deemed to be unenforceable as well. 

• Any improperly worded termination clause could result in the employer paying common law notice which usually means paying the terminated employee one, or several months of salary per year of service, rather than simply the one or two weeks of salary per year of service that is prescribed by the Employment Standards Act.

• Employee Implications: Employees should understand that invalid termination clauses might entitle them to common law notice, which is typically much more generous than statutory minimums.

If you have questions regarding termination clauses and how they may affect you as an employer or employee be sure to Reach out to us today!

Disclaimer: The content of this article/blog are provided as a general introduction and overview of a legal topic only. This article/blog does not provide legal or other professional advice, nor does it express any opinion. It is recommended to consult a legal professional before making decisions based on your specific circumstances.

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