Unenforceable termination language in employment contract invalidates entire termination clause

A recent Ontario case demonstrates the risk employers could face if the termination clause in their employment contracts are improperly drafted. Although this case hails from Ontario, the decision offers a helpful lesson for employers in British Columbia.

In Henderson v. Slavkin et al., 2022 ONSC 2964, the Ontario Superior Court of Justice found certain clauses mentioning termination in the employment contract to be non-compliant with the Ontario Employment Standards Act (ESA) and held that any unenforceable language relating to termination was enough to invalidate the enforceable termination clause.

In this case, a former employee sued for wrongful dismissal as she claimed that the employment contract she signed was unconscionable and contained clauses contravening the ESA, specifically: the termination clause, the conflict of interest clause, and the confidentiality clause.

Although the court determined that the termination clause itself was enforceable as there was no inconsistency or ambiguity between the termination clause and the ESA, the judge ultimately found that the conflict of interest clause and the confidentiality clause were inconsistent with the ESA, which in turn invalidated the entirety of the termination provisions. In finding that the entirety of the termination provisions were unenforceable, the court awarded the employee 18 months’ severance with three months deducted for mitigation.

This case serves as an important reminder for employers to ensure that your employment contracts are consistent with the relevant Employment Standards Act. If the language of the employment contract are found to be inconsistent with the ESA, employers could be left vulnerable and unprotected when it comes to the severance potentially owed upon termination of an employee.

To ensure that your employment contracts protect your business, we encourage you to reach out for a free consultation.