Many employers prepare written
employment agreements that limit employee entitlements on
termination of employment. In the absence of an enforceable
termination provision, employees are entitled to notice of
termination at common law, or pay in lieu thereof.
The case law in Ontario has changed
considerably in the past few years regarding what constitutes a
valid termination provision. One decision at the forefront of these
developments is Stevens v Sifton Properties
Ltd. In this case, the plaintiff argued that the
termination provisions in their employment contract violated the
Ontario Employment Standards Act, 2000
The employment contract provided that
the employee would receive notice of termination or pay in lieu of
notice and/or severance pay in accordance with the ESA. It also
provided this would be in satisfaction of all claims and demands
against the employer.
The employee argued that because the
contract did not provide for benefits continuation during the
notice period, it violated the ESA and rendered the termination
The court agreed. The contract
limited the employee's entitlements to notice of termination
and severance. It provided that the employee would not receive any
further entitlements arising out of statute or common law. Even
though the employer had indeed provided the employee with benefits
during the ESA period, the court held the contract was void. As
such, the language in the agreement at issue is distinguishable
from contracts which provide only that ESA minimums will apply but
don't have a catch-all limiting provision.
What is next?
This decision has prompted many
employers to revisit the language in their employment contract
termination provisions. Since the Sifton
Properties case, employment contracts that limit
employee entitlements to notice of termination and severance pay,
without taking into account other ESA entitlements may be deemed
void by a court.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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