On the Outs – Termination Provisions Need to be Updated

Employees are generally entitled to “reasonable notice” (or pay in lieu of such notice) if their employment is terminated without cause. Reasonable notice is calculated by courts on a case by case basis by looking at the length of service of employees along with their age, level of skill and education, and the nature of their work.

Employers can validly limit their obligations to their employees by putting in place an termination clause that meets or exceeds the minimum standards set out in the Employment Standards Act (ESA).

That said, Ontario courts have interpreted these clauses in favour of employees, invalidating any termination clause that could potentially violate the ESA.

Ontario courts have held that if any one aspect of a termination clause is invalid, then the whole termination clause is unenforceable. For example, if an employer’s termination for just cause provision violates the ESA, then their termination without cause provision is also rendered void.

Professionals and small business owners face a huge liability when terminating employees who are entitled to reasonable notice. We recommend that you seek legal assistance to update your employment contracts to ensure that you limit your liability in this regard.

If you are an employee who has been recently terminated, it is worthwhile to seek legal advice to determine whether your employment contract is enforceable. You may well be entitled to more notice that your contract sets out.