Not What You Bargained For: Court Hands Down Controversial Ruling On Termination Provisions

Employers should review the termination provisions in their employment agreements following a recent decision of the Ontario Superior Court of Justice. In Wright v. The Young and Rubicam Group of Companies,¹ the Court held that "all inclusive" termination provisions that do not specifically account for the continuation of benefits or that could result in an employee receiving less notice or severance pay than required under the Employment Standards Act, 2000 (the "ESA") are void and unenforceable.

background

John Wright was dismissed without cause from his position with Young & Rubicam ("Y&R") after five years of service. Wright's employment agreement with Y&R contained a termination provision which capped his entitlement to pay in lieu of notice and severance pay in the event of a dismissal without cause. The termination provision also contained "all inclusive" language as follows: