Termination provisions in employment agreements have come under
intense scrutiny in recent years from Ontario courts. But if the
Ontario Court of Appeal's decision in Oudin v Le Centre
Francophone de Toronto
("Oudin")1 is any
indication, the tide may finally be turning in favour of
Mr. Oudin was hired by the Centre Francophone de Toronto in
2000. He worked as a project manager for the Centre for 13 years
until his employment was terminated, on a without cause basis, in
Mr. Oudin's employment agreement contained a termination
provision that allowed the Centre to terminate his employment on
"15 days notice or the minimum notice required under the
Employment Standards Act or by paying an amount of salary
equal to the salary the employee would have had the right to
receive during the notice period". Relying on this provision,
the Centre provided Mr. Oudin with his minimum statutory
entitlements of eight weeks' pay in lieu of notice and 13
weeks' severance pay. The Centre also "voluntarily"
continued Mr. Oudin's benefits for six months.
Despite the termination provision, Mr. Oudin commenced an action
for wrongful dismissal against the Centre. According to Mr. Oudin,
the provision was void and unenforceable because it marked an
attempt to contract out of the Employment Standards Act,
2000 ("ESA") as it didn't
provide for continuation of benefits or severance pay.
"Curative Language" Saves the Day
At trial, the Centre admitted that certain provisions in Mr.
Oudin's agreement fell below the minimum statutory
entitlements, contrary to s. 5(1) of the ESA2.
Nevertheless, the trial judge upheld the termination provision and
dismissed Mr. Oudin's action.
In doing so, the trial judge relied in part on "curative
language" in the agreement which provided that any provision
that was invalid by virtue of law (e.g., because it fell below the
minimum ESA entitlements) could be "modified" to the
extent necessary in order to make the provision compliant. Based on
this language the trial judge concluded that there had been no
attempt to contract out of the ESA, and further that the parties
had agreed that the ESA would be respected:
Contracts are to be
interpreted in their context and I can find no basis to interpret
this employment agreement in a way that neither party reasonably
expected it would be interpreted when they entered into it. There
was no intent to contract out of the ESA in fact; to the contrary,
the intent to apply the ESA is manifest.
On appeal, Mr. Oudin tried to argue that the trial judge had
erred because the termination provision provided that the Centre
could terminate his employment with ESA minimum notice, but made no
mention of ESA severance pay. However, the Court of Appeal rejected
this argument and agreed with the trial judge that the intention of
the parties was to comply with the ESA in all respects.
What Employers Should Know
The decision in Oudin comes on the heels of another
recent victory for employers: the decision in King v. Cannon
Design Architecture Inc.
("King"). In that case, a
termination provision that failed to mention benefits continuation
contrary to s. 61(1)(b) of the ESA was saved by curative language
which provided that the employer would comply with the ESA if a
greater benefit to the employee was provided therein.
The results in Oudin and King suggest that the
courts may be moving away from the highly technical approach to
interpretation that has seen numerous termination provisions
recently struck down. Instead, it appears as though the courts have
started favouring an approach that focuses more on the intention of
the parties to the employment agreement and not permit
"after-the-fact" attacks on the language.
Despite this development, employers are still wise to draft
termination provisions with great care. While Oudin and
King are clearly of assistance to employers that include
curative language in their agreements, each case will always turn
on its own facts. The best way to avoid a dispute about the
enforceability of a termination provision is to ensure that such
provisions provide for at least the minimum amount of notice,
severance pay (if applicable), benefits continuation and other
entitlements required by applicable employment standards
legislation. Employers should ensure that their precedent offer
letters are updated to reflect the new language.
1. 2015 ONSC 6494 aff'd 2016 ONCA
2. Subsection 5(1) of the ESA provides
that "no employer or agent of an employer and no employee or
agent of an employee shall contract out of or waive an employment
standard and any such contracting out or waiver is
3. 2015 CarswellOnt 20496
4. Also see BlackBerry Ltd. v.
Marineau-Mes, 2014 ONSC 1790.
The foregoing provides only an overview and does not
constitute legal advice. Readers are cautioned against making any
decisions based on this material alone. Rather, specific legal
advice should be obtained.
Unfortunately, reasonable accommodation for employees in the workplace continues to be the source of significant litigation and even today we continue to see outrageous examples of employers behaving badly.
We are now beginning to see reported cases involving charges and subsequent fines laid against employers for failing to provide information, instruction and supervision to protect a worker from workplace violence.
On October 13, 2016, the Supreme Court of Canada denied leave to appeal an Ontario Court of Appeal decision which ordered an employer to pay a former employee 37 months of salary and benefits following termination.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).