Ontario Court Reaffirms That a Saving Clause in an Illegal Termination Provision Does Not Cure the Problem :
In Wilds v. 1959612 Ontario Inc., 2024 ONSC 3452 (CanLII) Justice Vermette found multiple ESA violations in the employment contract.
In determining whether the savings clause was sufficient to offset these illegal provisions, this is what the judge said :
[64]????????The last paragraph of section 15.1 of the Employment Agreement is a “saving provision”.?For convenience, I reproduce this paragraph again:
It is intended that this termination provision includes any entitlements you have pursuant to the?Act.?In the event that your entitlements pursuant to the?Actexceed these contractual provisions, those statutory provisions shall replace these contractual provisions and no further payments are required.?You agree that the provision of notice, pay in lieu, or a combination of both as set out above will fully satisfy all obligations of the Organization to you, whether arising pursuant to statute, common law or otherwise, and that you will have no further entitlement to notice, pay in lieu, or severance arising out of your employment or the termination thereof.?To be clear, these provisions replace any common law entitlement that you would otherwise have.
[65]????????Gibson’s attempts to contract out of the?ESA?in the termination provisions cannot be saved by this paragraph:see?Perretta?at para.?58.?This paragraph cannot reconcile the parts of the termination provisions that are and have been in direct conflict with the?ESA?from the outset.?See?Rossman?at paras.?35, 40-41.?The statement at the beginning of the paragraph that the intention of the termination provisions is to include any entitlement that the employee has pursuant to the?ESA?is contradicted by clear violations of the?ESA?in the termination provisions.?Such language creates ambiguity and confusion for an employee and does not constitute clear wording that allows an employee to know at the beginning of their employment what their entitlement will be at the end of their employment.?In my view, the termination provisions in the Employment Agreement were not drafted with strict compliance with the?ESA?as their main objective.?See?Waksdale?at para.?7.
[53]?? ?? ?? ? A severability clause in an employment agreement does not have any effect on clauses of the agreement that have been made void by statute, and cannot be used to rewrite, read down or interpret the terms of the agreement so as to provide for the minimum standard imposed by the ESA .? See Waksdale at para. 14 and North v. Metaswitch Networks Corporation, 2017 ONCA 790 at para. 44 .?
[54]????????Further, “saving provisions” in termination clauses cannot save employers who attempt to contract out of the?ESA’s minimum standards, and cannot reconcile a provision that is in direct conflict with the?ESA?from the outset.?Holding otherwise creates the risk that employers will slip sentences into employment contracts in the hope that employees will accept the terms.?This outcome exploits vulnerable employees who hold unequal bargaining power in contract negotiations.?Moreover, it flouts the purpose of the?ESA?– to protect employees and to ensure that employers treat them fairly upon termination.?Employers cannot be permitted to draft provisions that capitalize on the fact that many employees are unaware of their legal rights and will often refrain from challenging notice provisions in court.?Attempting to reconcile the provisions of a termination clause with the benefit of hindsight runs counter to the remedial purpose of the?ESA.?See?Rossman?at paras.?35, 40-41.
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My Comments :
This case definitively determines that neither savings clauses or severability clauses can fix an otherwise illegal termination provision.
Therefore a termination clause will only be enforceable if on its face, there is no violation of the ESA.
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Vice President, Labour Relations Vice President, Insurance J. D. Irving, Limited
1 个月Ironic that you speak of the need for careful construction of wording and then start the second sentence with "their".
Lawyer, Adjudicator, Mediator and Founder at Pinto Shekib LLP
1 个月Great decision. There is ample case law from the Courts that have identified the power imbalance between employer and employee as an important factor and have indicated that any drafting ambiguities will be resolved in an employee's favour. If a termination clause is found to be ambiguous, the Court will and should construe that uncertainty in favour of the employee. Drafting termination clauses requires a high level of clarity and this one here is clearly sloppy. I represent both sides of the coin and always advise my Employer clients to have their contracts revised on a regular basis to keep up with the changes in the law or it will cost you.
Vice President, Labour Relations Vice President, Insurance J. D. Irving, Limited
1 个月It's this type of decision that reaffirms the reality that many decision-makers in the labour and employment context , whether judicial or administrative, are engaged in academic exercises to rationalize a predetemined outcome rather than be objectively unbiased. The law in this field is being made by individuals who have no idea what the practical realities in an actual workplace are.