Is the “Termination Clause” in my employment contract binding?

In recent years, upon being hired at a new workplace, it has become far more common for the
employer to require that the new employee sign an employment contract that contains a
“termination” clause. This provision usually purports to limit what the employer must pay to the
employee in “severance” when he or she is fired, or terminated, “without cause” to the strict
minimums contained in the Employment Standards Act.
Such provisions are routinely being set aside by our courts as unenforceable, for a number of

  • they are often far too vague, by stating, for example “subject to the ESA”, or “as per the ESA”,
    without stating what that means;
  • they must state how the benefit plan, if one exists, is to be maintained, and sometimes
    wrongfully try to claw back employer contributions to the plan;
  • often these clauses wrongfully misuse certain terms that have a strict legal interpretation, such
    as “just cause”, “for cause”, and “wilful misconduct”;
  • there may not have been “consideration” for the employee signing the contract in the first place;
  • if one part of the entire termination provision of the contract – for example, the section
    describing “cause” terminations, is found to be invalid, then the whole termination provision is
    invalid, including the “without cause” section.
    In short, our courts hate these provisions.
    If you have recently been terminated from your employment, and the employer tries to rely on
    any termination clause in the contract to limit what you are being paid, call Graeme Fraser for
    legal advice before signing their paperwork foisted upon you, often with a very short time frame
    to do so.