A
termination clause is a part of a contract that describes the conditions or circumstances under which the contract can be ended or cancelled by one or both parties involved.
Full definition
Employers should pay careful attention to the language of
termination clauses in offer letters or agreements as courts continue to signal that they will be looking for ways around them.
Based on my experience, I would estimate that 30 %
of termination clauses in current employment contracts are void.
From an employer's standpoint, because fair severance can become very costly, the safest thing to do is have an employment lawyer draft an agreement with a legally
enforceable termination clause.
However, employers should nevertheless continue to exercise caution when drafting
termination clauses by specifically referring to benefits continuation during the statutory notice period.
The 2016 decision is noteworthy because it provides a thorough review of previous Canadian decisions that have
considered termination clauses in employment contracts.
Providing new consideration is not, however, sufficient to ensure that a court will enforce a
new termination clause.
The court did not elaborate upon this aspect in detail, which leaves uncertainty as to whether such a provision
saves termination clauses under any instance of constructive dismissal.
The problem is so widespread that employment lawyers who represent employees have become experts at quickly spotting
flawed termination clauses.
If the individual decides to accept an offer of employment that contains an
enforceable termination clause the individual should at least understand what he or she is signing up for.
The number of employers who provide their employees with employment contracts containing
void termination clauses is amazing.
While recent court decisions mean we know more
about termination clauses than we did one year ago, a year is a lifetime in employment law.
Since the employees will be entitled to reasonable notice of dismissal, the employer can not simply have the employees sign revised employment contracts with a
new termination clause.
Allowing a voluntary payment to an employee that complies with the ESA to cure what would otherwise be an unenforceable
termination clause does little to incentivize proper drafting in the first place.
Develop employment agreements
with termination clauses that contemplate without cause dismissals, allow for predictable termination costs and can minimize the possibility of litigation
Employers in Ontario rarely comply with the requirements of the La - Z - Boy test when inserting
termination clauses into existing employees» contract of employment.
However, as explained in our earlier blog posts, here and here, the Court of Appeal's recent decisions
on termination clauses seem to be turning some of these principles on their heads.
Ms. Wood argued that the enforceability of the clause was to stand or fall on its own wording, and that FDI could not remedy an otherwise illegal and
unenforceable termination clause by its conduct.
My particular work included proofreading, helping with drafts, searching for potential
termination clauses within contracts, categorising trademarks, and learning about patent cases.
The language of the contractual
termination clause violated the statute because it set out an exhaustive summary of what the plaintiff was to receive upon termination — «drawing the circle» around the employee's termination entitlements — but failing to provide for benefits continuation during the statutory notice period.
In fact, the appellate courts have
upheld termination clauses that were, in many respects, indistinguishable from the clauses that the Ontario courts recently struck down.
Zoomermedia provides an important reminder for employers to draft clear and enforceable
termination clauses from the outset.
I do nor know if the feedback payback continues if the thing stops altogether then resumes automatically on the start of power after repair, and I also do not know the form of contract
termination clauses at end of agreed life.
Employers who wish to limit their exposure to longer notice periods for skilled, short service employees should ensure that they have well -
drafted termination clauses in place, and consider a provision allowing for restrictive covenants to be waived when their harm outweighs their benefit.
Employers operating in Ontario who «draw the circle» around employee rights and entitlements on termination should carefully review and ensure that their
contractual termination clause complies with all aspects of statutory minimum standards, and in particular: (a) notice or pay in lieu, (b) benefits continuation during the notice period, (c) severance pay, if applicable, and (d) continued vacation accrual during the termination notice period.
In this case, Wood v. Fred Deeley Imports Ltd., the employee had signed an employment agreement that contained the
following termination clause:
More recently, in North v. Metaswitch Networks Corporation, 2017 ONCA 790 (CanLII), the Ontario Court of Appeal applied the rule stemming from Wood, to void an
entire termination clause due to one provision that that was deemed to violate the minimum requirements of the ESA.
However, in recent years, Canadian courts have been unsettled on the necessary requirements of
termination clauses which attempt to limit the notice period to the «statutory minimums».
In this particular instance of constructive dismissal, the court maintained that the changes to the employment contract were not severe enough to void the
negotiated termination clause in the employee's contract.
Alternatively, if you are going to use ESA -
only termination clauses, review them carefully to ensure that they address all aspects of an employee's entitlements under the ESA.
Continue Reading The Pendulum Swings Back: The Court of Appeal
Rules Termination Clause Valid Despite Silence on Benefits Continuation
It is common for employers to
place termination clauses and non-competition and non-solicitation clauses in employment contracts that will not be enforced by a court.
«Unlike a rental arrangement with a one or two year contract and
known termination clauses, defaulting on a mortgage can do major damage to your credit report,» he tells Business Insider.