Another Ontario termination clause bites the dust

I’ve spent the last few weeks running and speaking at the CGIB educational events in Toronto, Calgary and Vancouver.  We’ve had employment lawyers speak at each of them on a number of topics employers face when it comes to benefits and how they handle them at termination. The one resounding theme that arose was the need for current up to date employment contracts.

Every employee /employer relationship has an employment contract, it’s only a matter if it is written or oral. Written is always preferred as it clearly states how the parties enter into the contract (pay, vacation, etc.) and how they exit (termination pay, benefit extension (or not) etc.).  This can prevent issues when the employment comes to an end.

In Ontario, the courts have ruled that having items like “non-compete clauses” in your contract can render the entire document invalid.  This can cause issues if you terminated a 20 year employee (as en example) who had a written employment contract that had both a non-compete and a termination clause that said that the employee would be paid 6 months of base pay only on being severed.  The non-compete clause would nullify the remainder of the contract leaving the employer responsible to the common law period (as much as 2 years) and could also include items like bonuses, benefits etc.  This can be corrected by reviewing these contracts with an employment lawyer and ensure they are up to date and enforceable.

The article below provides an example of how things go wrong even when written with the best intent.  Please consult an employment lawyer for advice to create enforceable contracts that are specific to your business and particular situation.

“Termination clauses can no longer be seen or read in an isolation of each other – they have to be read as a whole, so employers have to be very careful in reviewing their employment agreement templates from beginning to end, and ensuring that no provision of the agreement, whether it deals with termination or not, infringes on employees’ statutory rights to notice, severance pay, and benefits continuation under the under [employment standards legislation].”