July 3, 2025
We have written several articles on the trend in Ontario courts to find termination clauses in employment contracts as void because they do not conform to the minimum standards in the Employment Standards Act.
This does not mean all termination clauses are void. A well-crafted clause may be upheld.
THE CASE
Bertsch v. Datastealth Inc. involves the dismissal without cause of a vice-president of the corporation. He was paid four weeks pay in lieu of notice in accordance with his employment contract. This is considerably less than he would be likely to receive at common law.
The Ontario Court of Appeal upheld the decision of a Superior Court judge that the clause conformed to the Employment Standards Act and was valid. The employee’s claim was dismissed.
The Court agreed that nothing in the clause violated the Act’s requirement of “willful misconduct, disobedience or willful neglect of duty” as the only grounds to terminate for cause without paying termination pay and other entitlements.
The clause was held to be clear and unambiguous. Despite the fact that “[w]here a termination clause can reasonably be interpreted in more than one way, the interpretation that favours the employee should be preferred”, in order for there to be a finding of ambiguity, there must be ““something more than the mere existence of competing interpretations”. The Court does not explain that last comment further.
This was not a case where the clause used legal terms or language in a way that would be confusing to the average person. Of course, the average person may not know what their entitlement is under the Act versus common law, but it is up to them to investigate (perhaps by consulting a lawyer).
TAKEAWAYS
- Employers may take comfort from knowing that the courts will uphold certain termination clauses,
- But does that mean their clause is valid?
- Employees ought to seek legal advice before agreeing to a contract with a termination clause, while they have bargaining power.
WHAT WEILERS LLP CAN DO TO HELP YOU
The cost of having a lawyer review or draft your employment contract template, or where appropriate, create a custom agreement, is modest compared to the cost of litigation. Templates should be updated regularly to keep current with the law, and it is always risky to use a form of contract found on the internet or drafted by a non-professional.
Where you decide that you intend to terminate, Weilers LLP can also look at your existing agreement, consider all the relevant facts, and advise you regarding the potential for it to be found either valid or invalid, so that you can approach offers and negotiations on a well-informed basis.
We can assist with negotiating a severance package and defend employers in wrongful dismissal cases.
At Weilers LLP, we also advise employees and assist them in understanding and negotiating employment contracts at the front end of the relationship, and as to their rights on termination. It is always smart to have a lawyer review any termination offer before you accept it.