Employers Get It Right: Court Upholds Contractual Termination Provisions

A recent decision of the Ontario Court, Burton v. Aronovitch McCauley Rollo LLP, 2018 ONSC 3018 (Burton), adds to the considerable case law that addresses when a termination provision is void for failure to comply with the provisions of the Ontario Employment Standards Act, 2000 (the ESA).

In brief, the ESA sets minimum standards, including the following rights on termination (unless an exception, such as "wilful misconduct," applies):

Notice of termination, or termination pay with benefit continuance, for up to eight weeks; and Subject to certain conditions (such as the size of the employer's payroll and the employee's length of service), severance pay of up to 26 weeks. Employers frequently try to avoid the more generous "common law" entitlements on termination by contracting with employees to provide a specific amount of notice or pay in lieu of notice. Such contracts are binding, provided that they comply with the minimum ESA provisions.

The clause at issue in Burton was the following:

"(a) AMR may, at its sole discretion, terminate your employment without cause (a Non-Cause...