Employers across Ontario are double-checking their contracts since the Ontario Court of Appeal released its judgment in Waksdale v Swegon North America Inc., earlier this month. The court held that if an Employment Agreement contains a termination-with-cause provision that breaches the Employment Standards Act, 2000 (ESA), the termination-without-cause provision will be rendered unenforceable as well. This is true even if the employer was not relying on the for cause section and had proceeded on a without cause basis. Even a severability clause cannot save a provision in this context.
Almost all employers require new employees to sign an employment contract. And almost all employment contracts have a termination clause. And most of the termination clauses have a provision which states that the employer has the right to terminate an employee for just cause without notice. This case suggests most of these termination clauses are not enforceable.
In Cheong v Grand Pacific Travel & Trade, (2016 BCSC 1321), Justice Warren held that an Employee Handbook containing an ESA only termination provision was unenforceable for the following reasons: