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Are your employment contracts enforceable?

Many employers prepare written employment agreements that limit employee entitlements on termination of employment. In the absence of an enforceable termination provision, employees are entitled to notice of termination at common law, or pay in lieu thereof.

The case law in Ontario has changed considerably in the past few years regarding what constitutes a valid termination provision. One decision at the forefront of these developments is Stevens v Sifton Properties Ltd. In this case, the plaintiff argued that the termination provisions in their employment contract violated the Ontario Employment Standards Act, 2000 (“ESA”).

The employment contract provided that the employee would receive notice of termination or pay in lieu of notice and/or severance pay in accordance with the ESA. It also provided this would be in satisfaction of all claims and demands against the employer.

The employee argued that because the contract did not provide for benefits continuation during the notice period, it violated the ESA and rendered the termination provision unenforceable.

The court agreed. The contract limited the employee’s entitlements to notice of termination and severance. It provided that the employee would not receive any further entitlements arising out of statute or common law. Even though the employer had indeed provided the employee with benefits during the ESA period, the court held the contract was void. As such, the language in the agreement at issue is distinguishable from contracts which provide only that ESA minimums will apply but don’t have a catch-all limiting provision.

What is next?

This decision has prompted many employers to revisit the language in their employment contract termination provisions. Since the Sifton Properties case, employment contracts that limit employee entitlements to notice of termination and severance pay, without taking into account other ESA entitlements may be deemed void by a court.

At the 2014 Ontario Employment Law Conference, on June 10, employment lawyer Landon Young, will be discussing,

  • The ground-rules for drafting non-competition and non-solicitation agreements
  • How to craft enforceable agreements, and
  • Practical strategies for implementing agreements upon termination of employment (for employees who don’t have agreements yet).

2014 Ontario Employment Law Conference

Don’t miss the opportunity to learn the latest! At the Ontario Employment Law conference, you will learn more about using contracts to protect your business as well as how you can ensure your employment agreements will be enforceable. Register Today!

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Stringer LLP

Employment and Labour lawyers at Stringer LLP
Stringer LLP is a leader in Canadian HR law. For over 50 years, they have taken a client-centered approach to responsive service, representing employers with labour relations and employment problems. Their firm’s practice covers a broad spectrum of HR law, including employment law, occupational health & safety, labour relations and arbitration, human rights, workers’ compensation, pay equity and corporate immigration, as well as issues under the Accessibility for Ontarians with Disabilities Act. They also provide training, seminars and conferences on the above topics. Read more
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