In the realm of employment law, the Ontario Court of Appeal's decision in Waksdale v. Swegon North America Inc. significantly influenced the enforceability of termination provisions in employment contracts. The Court of Appeal's recent decision in Dufault v. Ignace (Township) serves as a reminder that it is crucial for employers aiming to draft compliant and enforceable agreements to ensure "strict adherence" to the requirements of the Employment Standards Act, 2000 with respect to termination clauses.
The Waksdale Precedent:
In Waksdale, the Court of Appeal held that if any part of a termination provision violates the Employment Standards Act, 2000 (ESA), the entire termination clause is rendered unenforceable. This decision emphasized the necessity for employers to ensure that all components of their termination clauses comply with the ESA, as an invalid "for cause" provision could invalidate the entire termination agreement.
Insights from Dufault v. Ignace (Township):
In the Dufault decision the Court of Appeal reaffirmed the principles established in Waksdale, particularly regarding the necessity for termination clauses to adhere strictly to the ESA standards.
Implications for Employers:
- Comprehensive Review of Termination Clauses: Employers must meticulously review and, if necessary, revise their employment contracts to ensure that all termination provisions, including "for cause" and "without cause" clauses, comply with the ESA. Any non-compliant clause risks nullifying the entire termination agreement.
- Holistic Contract Compliance: Beyond termination clauses, employers should ensure that all aspects of their employment contracts align with the ESA and other relevant legislation. This comprehensive approach minimizes the risk of contractual provisions being deemed unenforceable.
- Proactive Legal Consultation: Given the evolving nature of employment law, it is prudent for employers to consult with legal professionals when drafting or updating employment contracts. This proactive step ensures that agreements are not only compliant but also reflective of current legal standards and best practices.
Conclusion:
While the employer in Dufault has declared its intention to seek leave to appeal to the Supreme Court of Canada – and we will continue to monitor the progression of this case – the Court's approach in Waksdale and Dufault underscores the critical importance of drafting precise and compliant employment contracts. Employers must be vigilant in ensuring that all contractual provisions, particularly those related to termination, adhere to legislative requirements. By doing so, they can mitigate legal risks and uphold fair employment practices. As always, the team at CCPartners is ready to assist in drafting proper and enforceable employment agreements for any and all situations.
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.
