Less Than Perfect Termination Clause Upheld

As employers have discovered in recent years, although termination clauses are a best practice, former employees will do whatever they can to set them aside following termination.  In many cases, courts have set termination clauses aside, despite the apparent intent of the parties, where they are not drafted perfectly.  A recent case, Wood v. Fred Deeley Imports Ltd., 2016 ONSC 1412 suggests that the very high standard imposed on employers may have lessened somewhat.  

The termination clause at issue provided that the employer was entitled to terminate the employee’s employment “at any time without cause by providing ... two weeks Notice of Termination or pay in lieu thereof for each completed or partial year of employment with the company”.  The termination clause also provided that “payments and notice provided for in this paragraph are inclusive of your entitlements to notice, pay in lieu of notice and severance pay pursuant to the Employment Standards Act, 2000”.  

The former employee challenged this clause asserting that it was unenforceable because she accepted a verbal offer of employment before receiving the written offer of employment and because it did not specifically provide for the ongoing payment of benefit premiums as required by the Employment Standards Act, 2000.  The Court, however, rejected these arguments on the basis that the offer of employment preceded her actual start and because the termination clause provided more than what was required by the Employment Standards Act, 2000 and the employer kept the benefits in place.  

In sum, in a welcome decision for employers, the Court applied a sensible analysis that reflected the intention of the parties in signing the agreement.