If "Only" The Termination Clause Was Valid: Ontario Superior Court Finds Termination Clause Violates The ESA Due To Its Use Of "And/Or" And "Only"

• Published date: 26 June 2023
• Subject Matter: Employment and HR, Contract of Employment
• Law Firm: CCPartners
• Author: Ms Danielle Jager

A recent case Quesnelle v. Camus Hydronics Ltd. (2022) ONSC 6156 demonstrates the importance of carefully and properly drafting an employment contract. In this matter, the Superior Court of Ontario found that the use of "and/or" and "only" in a termination clause contravened the Employment Standards Act, 2000 ("ESA") and rendered the employment contract void.

Background

At common law, employees hired for an indefinite period of time can be dismissed without cause but only if the employer gives the employee reasonable notice. However, the Supreme Court of Canada characterized this principle as a presumption that is rebuttable if there is a contract of employment clearly specifying some other period of notice. In Ontario, employers can rebut this presumption through a termination clause but it will only be enforceable if it complies with the minimum employment standards found in the ESA. If it does not do so, or if it violates the ESA, in any way then the presumption is not rebutted and the employee is entitled to a common law reasonable notice.

This presumption is exactly why well drafted employment agreements are crucial for employers as the common law notice period is considerably longer in most cases than the notice period, and where applicable, severance pay provisions in the ESA. If the termination clause is at all unclear or ambiguous in its compliance with the minimum entitlements under the ESA then it will be considered void and unenforceable. If a provision within the termination clause is void the Court will not simply strike out the offending provision, instead, the Court will treat the entire clause as void.

The Case

The plaintiff, Quesnelle, had been employed with the defendant, Camus Hydronics Ltd., since 2014. The plaintiff's employment was governed by an employment contract that contained the following termination clause:

"During your Probation Period...