The Ontario Court of Appeal has written a very short but
potentially impactful decision with respect to the drafting of
enforceable termination provisions in employment contracts. This
decision offers a divergent perspective, and hope for employers, on
whether a termination clause must explicitly particularize each
entitlement pursuant to the Employment Standards Act, 2000
("ESA") to be enforceable and oust an employee's
significantly higher common law entitlements.
The decision, Oudin v. Centre Francophone de Toronto, was an
appeal of a partial summary judgment from the Ontario Superior Court
of Justice. Mr. Oudin commenced an action against his former
employer for damages related to an alleged wrongful dismissal. The
claim sought salary in lieu of common law notice through a partial
summary judgment motion, but was unsuccessful. Justice S.F. Dunphy
ruled that the employment contract between the parties limited Mr.
Oudin's termination entitlement to the minimums provided by the
The central issue in this case was the interpretation of the
notice provision in the agreement and whether the translation by
the motion from French to English was innaccurate. The provision in
question is the following:
"...Le CFT peut également résilier la
présente entente pour tout autre motif en donnant à
l'employé(e) un préavis de quinze (15) jours ou
le préavis minimum prescrit par la Loi sur les normes
d'emploi, ou en lui versant une indemnité salariale
égale au salaire qu'elle aurait droit de recevoir
pendant la période de préavis..."
On appeal, both parties agreed that the motion Judge's
interpretation was incorrect, but disagreed on the impact of the
interpretation. The clause was interpreted to read that the
employee could be terminated if provided the minimum required by
the ESA; however, the correct interpretation was the relationship
could be terminated by providing the minimum notice required by the
ESA. The Court of appeal agreed with the employer that the slightly
different translation did not assist Mr. Oudin's argument that
the contract was an attempt to contract out of ESA requirements.
Justice Dunphy was clear in his reasoning that the clause referred
only to notice and was not an attempt to contract out of ESA
In the recent past there have been a number of Ontario and other
court decisions which have found contracts to be void when they do
not refer to severance requirements or the continuation of benefits
in their termination clauses. Generally speaking, the absence of
these references has been interpreted as an attempt to provide
salary continuance but nothing more – in other words,
something less than what the ESA requires. These cases have
instructed employers to ensure termination clauses specifically
reference these other entitlements (potential entitlements with
respect to severance) or risk the entire clause being found
unenforceable and common law reasonable notice owing. This decision
does not overturn all of the previous jurisprudence which instructs
employers to be very careful and detailed in their employment
contracts. The decision is short and could be interpreted simply as
affirmation that deference should be shown to lower court judges
when their reasoning is clear, rather than a significant shift in
the case law.
This decision of the Ontario Court of Appeal nonetheless
provides hope that at least appellate courts will use a common
sense approach when an employment contract references the ESA but
fails to outline every entitlement that is to be continued during
the statutory notice period. That said, the CCP
team will continue to assist employers in drafting easy to
understand, comprehensive, and thoughtful employment contracts that
ensure termination contract language will stand up to the most
exacting standards of our courts.
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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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.
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