Termination clauses are commonly included in contracts to
specify the amount of notice or pay in lieu an employee will
receive if terminated without cause. It is legal for these
clauses to limit an employee's entitlement to the minimums set
out in employment standards legislation. But, the clauses have
to be very carefully drafted. If they are not, the clause will
not be enforceable and the employee will be entitled to reasonable
notice of termination in common law provinces. The Ontario
Divisional Court's decision in Movati Athletic (Group) Inc. v. Bergeron,
2018 ONSC 7258 provides guidance on what makes an enforceable
clause.
Background
The employee in this case had worked for the company for about
16 months when she was terminated without cause. The company
relied on a termination clause in her contract and gave her the
minimum entitlements under Ontario's Employment Standards
Act, 2000 (ESA). The clause stated:
