The Last Word? Enforcing Termination Clauses And Employment Agreements

Is this the last word? After a series of decisions in 2016 and the beginning of 2017 which have fallen on both sides of the debate on the enforceability of termination clauses, the Ontario Court of Appeal has issued its decision in Wood v. Fred Deeley Imports Ltd., 2017 ONCA 158, which may provide clarity to both employers and employees on whether the termination clause in their employment agreement is enforceable.

In Fred Deeley, the Ontario Court of Appeal struck down as unenforceable a termination clause that had previously been upheld by the motion's judge.

Ms. Wood had worked for Fred Deeley Imports Ltd. as a sales and event planner for just over eight years, where she had earned approximately $100,000.00, plus benefits. At the time of her hire, Ms. Wood had executed an employment agreement which contained a termination clause that stated (in part) as follows: