The subject to be discussed today is Termination Clauses in Emploment Contracts.
What is “Just Cause”?
In Ontario, many employment contracts contain a “just cause” provision, which provides that an employer may terminate an employee’s employment without any notice or pay in lieu of notice.
A recent decision by the Ontario Court of Appeal may render termination clauses in many Ontario employment contracts unenforceable.
In Waksdale v. Swegon North America Inc., 2020 ONCA 391 (“Waksdale”) the court held that a “just cause” provision that does not provide for the minimum notice requirements set out in Employment Standards Act (“ESA”) is unlawful. In addition, the presence of an unlawful “just cause” provision in an employment contract will render an otherwise lawful “without cause” provision unenforceable.
What are the implications?
Employers whose employment contracts contain an unlawful “just cause” provision will no longer be able to rely on a “without cause” provision limiting the amount of notice to which an employee is entitled. Employers would then be subject to common law notice requirements, which in some cases have been greater than 24 months.
In light of the Waksdale decision, termination provisions in employment contracts must now be drafted so that employees will receive minimum ESA entitlements despite being terminated for just cause.
Do you need assistance with your Employment Contracts?
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Edwards Creative Law is a boutique law firm provides legal services to Music, Film, Animation, Television, Interactive Digital Media, Games, and Publishing industry clients. For more info and blogs, please visit www.edwardslaw.ca
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* This article is for general informational purposes only and is not to be construed as legal advice. Please contact Edwards Creative Law or another lawyer, if you wish to apply these concepts to your specific circumstances.