As an Ontario employer, how do I write a termination clause that will actually hold up?
Ontario courts strike termination clauses that could breach the Employment Standards Act in any scenario — and a single invalid “for cause” sentence can void the whole termination provision and expose the employer to common law notice.
A valid termination clause must guarantee at least the Employment Standards Act minimums — notice, severance where applicable, and continued benefits during the notice period — in every foreseeable scenario, not merely in the case at hand. Courts read the clause as at the date of hiring.
Since Waksdale, an unenforceable “termination for cause” provision invalidates the entire termination scheme, including the without-cause paragraph, leaving the employer facing common law reasonable notice that can run to a month or more per year of service.
Consideration matters too. Asking an existing employee to sign a new contract without fresh consideration usually produces an unenforceable agreement, and clauses should be reviewed whenever an employee is promoted.
Source: Employment Standards Act, 2000, S.O. 2000, c. 41 · Waksdale v. Swegon North America Inc., 2020 ONCA 391
This work is handled by Maryam Noorzad (Employment law). Read more about employment law at VK Law Group, or send us the facts and we will tell you where you stand.
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