Another Termination Clause Bites the Dust

Employers typically insert termination clauses into their employment contracts to reduce the cost of terminating employees.  As long as the termination clause provides at least the minimum notice and severance set out in the Ontario Employment Standards Act (“ESA”) a court will enforce the termination provision.  However, if the termination clause provides the employee with less notice than required by the ESA the court will strike the clause from the employment contract and award the former employee with reasonable notice of dismissal, which will typically entitle the former employee to a much longer notice period than that provided for by the termination clause.

As I have discussed before, it is truly amazing how many termination clauses in Ontario employment contracts breach the minimum standards of the ESA and, therefore, will not be enforced by a Court.  Based on my experience, I would estimate that 30% of termination clauses in current employment contracts are void.

One of the latest decisions to find that a termination clause is void is Miller v. A.B.M. Canada Inc., 2014 ONSC 4062.  The relevant portions of the termination clause are:

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