Termination clauses in employment contracts: dead?
Last year, the Ontario Court of Appeal [ONCA] in a case called Waksdale v Swegon North America Inc. [“Waksdale“] said that a termination clause in an employment contract must be looked at in its entirety, and so invalid clauses can invalidate valid clauses, even where they are separate and governed by a severance clause.
The Supreme Court of Canada has recently denied leave to appeal this case. What does this mean for employers and employees?
- If your contracts have a termination clause you should operate on the working assumption that it is invalid. Take it to an employment lawyer and have it reviewed.
- Do this quickly. If you’re an employer, you may have a clause which you think limits your liability to a given number of weeks but instead is invalid and exposes you to a number of weeks far greater than you thought you had contracted for. If you’re an employee facing termination you may have a weapon that you didn’t have before.
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