Feb 2, 2018

The Ontario Court of Appeal held that an employer's conduct upon termination or during the notice period cannot remedy an otherwise illegal and unenforceable termination clause.

In this case, the employee signed an employment agreement the day after she commenced work for Fred Deeley. While the Court concluded that signing a written employment agreement the day after the employee commenced work did not render the agreement unenforceable, it found that the termination clause contained in the employment agreement improperly excluded the employee’s minimum statutory entitlement to benefits continuation during the notice period. The Court also stated that the termination clause improperly combined statutory notice of termination with statutory severance pay, resulting in an ambiguous provision. Namely, the termination provision improperly created several possible scenarios, some of which were not compliant with the Employment Standards Act, 2000 ("ESA"). Accordingly, the termination clause was void and unenforceable.

Finally, the Court concluded that even by providing the employee with more than her minimum entitlements under the ESA upon termination, including benefits continuation and severance pay, an unenforceable termination clause cannot be remedied after the fact upon termination. An employee will be entitled to reasonable notice of termination at common law in these circumstances equivalent to nine months.