Termination clause
A termination clause is a term in an employment agreement that sets out how and on what notice or pay the employment can end. It cannot undercut the minimums in employment standards law, and Ontario’s Court of Appeal has treated an illegal part of a clause as able to taint the whole.
A buyer who keeps the seller’s staff may inherit these clauses, so whether each one is enforceable is worth checking. In Ontario, the Employment Standards Act, 2000 says no employer shall terminate an employee employed continuously for the statute’s minimum period unless it gives written notice or pay as the Act provides, and section 55 excludes prescribed employees from notice and termination pay under that Part. See what termination clauses in staff contracts a buyer inherits.
How Ontario courts read the clause
In Waksdale v. Swegon North America Inc., the Court of Appeal for Ontario held that termination provisions must be read as a whole, and that courts will not enforce provisions that are in whole or in part illegal. That is an Ontario decision, and this entry covers Ontario only; check the rules in the province where the business is, such as British Columbia’s Employment Standards Act there. See also termination pay.
What to review
- Whether the clause states a notice or pay below the statutory minimum
- Whether a for-cause provision could breach the statute
- Whether the agreement is signed and dated
Sources
This definition is checked against primary sources. Links were last confirmed on the dates shown.
- 01Government of OntarioGovernmentEmployment Standards Act, 2000, S.O. 2000, c. 41
- 02Government of Ontario — Ministry of Labour, Immigration, Training and Skills DevelopmentGovernmentTermination of employment — Your guide to the Employment Standards Act
- 03Court of Appeal for OntarioCourt decisionWaksdale v. Swegon North America Inc., 2020 ONCA 391
- 04Government of British Columbia (King’s Printer)GovernmentEmployment Standards Act
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