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Enforceability of termination clause

Ontario divisional court addresses enforceability of termination clause in federal jurisdiction

In the past three years there have been a number of cases arising from the Ontario courts considering whether or not termination clauses which purport to rebut the implied presumption of common law notice and limit an employee’s entitlements upon termination are enforceable. The enforceability of such clauses can have significant consequences on the quantum of an individual’s damages because an employee’s common law entitlements typically exceed his/her minimum entitlements under the applicable minimum standards legislation. The Ontario Division Court recently considered the enforceability of a termination clause in the federal sector in Luney v. Day Ross Inc., 2015 ONSC 1440.

 

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Enforceability of termination clause in employment agreement

Those of us that practice employment law understand that our Courts will not hesitate to deem a termination clause in an employment agreement unenforceable if they are provided with a reasonable basis upon which to do so. In recent times, we have seen two noteworthy cases that have dealt with termination clauses and been decided in favour of the employee. Employers and their counsel should be mindful of these cases as they implement employment agreements, if they hope to be able to rely upon them.

 

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