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Employment Contracts in Ontario

Does Your Employment Contract Have a Termination Clause? Is It Enforceable? 

The Company wants an employee to sign an employment contract to limit its liability for severance in the event of a termination of employment at a future date.

The Ontario Court of Appeal in Swegon v Waksdale North America Inc. (6/17/2020) voided the employment contract although the without cause termination provision was properly worded on account that the just cause provision was unenforceable. 

The Ontario Court of Appeal held that although it is a without cause termination and the without cause termination provision is enforceable, all the termination provisions in the employment contract must be compliant with the Ontario Employment Standards Act, 2000 or all the termination provisions are void. 

This case is a very significant case in the Province of Ontario when determining the enforceability of a termination provision in an employment contract. The effect of the employment contract being deemed void is that the employee is then entitled to his common law damages on termination which is typically significantly more than what the employment contract provides for.

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