“I can terminate you at any time” makes termination clause void

“I can terminate you at any time” makes termination clause void

In Dufault v. The Corporation of the Township of Ignace, 2024 ONSC 1029, Justice Pierce reviewed the following without cause termination clause:

“The Township may at its sole discretion and without cause, terminate this Agreement and the Employee’s employment thereunder at any time upon giving to the Employee written notice as follows: 

(i) the Township will continue to pay the Employee’s base salary for a period of two (2) weeks per full year of service to a maximum payment of four (4) months or the period required by the Employment Standards Act, 2000 whichever is greater. This payment in lieu of notice will be made from the date of termination, payable in bi-weekly installments on the normal payroll day or on a lump sum basis at the discretion of the Township, subject at all times to the provisions of the Employment Standards Act, 2000. 

The judge found that this clause was illegal as it contravened the ESA in the following ways:

  1. Base Salary is different from Regular Wages as required by the ESA which can include commissions, bonuses and the like.
  2. Section 61(1) of the ESA requires that pay in lieu of notice be paid as a lump sum and not on an installment basis.
  3. By giving the Employer the sole discretion to terminate at any time , this breaches both section 53 (reinstatement after a protected leave ) as well as Section 74 (reprisal for exercising a right under the ESA).

My Comments:

This case now adds to the long list in the way which poorly drafted termination clauses can violate the ESA and render the entire termination provision unenforceable. Normally, this leads to a determination of reasonable notice; however, in this case because the Plaintiff was terminated partly into a fixed term contract (another huge mistake in drafting) she received compensation for the balance of the contract, which was 101 weeks or $157,071.

This case is under appeal.

employment law
ESA violation
termination
Termination clause
without cause
Share

Related Posts

Imagen 1

Addressing domestic violence in the workplace – some insights

The Ontario Occupational Health and Safety Act violence and harassment prevention provisions (Bill 168) require an employer to take all reasonable precautions in the circumstances for the protection of all employees if a domestic violence situation is likely to expose a worker to physical injury in the workplace and the employer becomes aware or ought reasonably to be aware of the situation.

But what does that imply? The law states the requirement but provides little guidance on what employers need to do to prevent domestic violence from spilling into the workplace. In addition, many employers are not comfortable addressing a situation of such a personal nature. It is not an easy task to complete and might never be.

Marie-Yosie Saint-Cyr, LL.B. Managing Editor

Read more
Imagen 1

Sleeping on the Job? What do you have to do to get fired in Canada, anyway?

Employees can be dismissed for cause, and therefore without notice or severance, when their misconduct or performance is so egregious that the employment relationship has been irreparably harmed. In assessing this issue, employers must adopt a contextual approach, which considers not only the misconduct in question, but the entirety of the employment relationship.

Rudner Law, Employment / HR Law & Mediation

Read more
Imagen 1

Employees with disabilities – accommodation strategies (Part I)

Accommodating employees with disabilities to the point of undue hardship under human rights legislation can be a complicated task. It’s important to make sure the accommodation process goes smoothly and the employee can focus on working as efficiently as possible, but employers may not be sure about what kinds of questions to ask disabled employees in order to meet their needs.

Christina Catenacci, BA, LLB, LLM, PhD

Read more