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In an employment contract, is this enforceable?

The Company may terminate your employment at any time, without just cause, by providing you with the minimum notice or pay in lieu, that you are entitled to under the Employment Standards Act. You agree that your right to notice of termination of employment will be limited to the notice provided for in this Agreement. You further understand and agree that by complying with this paragraph 5(c), the Company satisfies its entire obligation to you, and you will not be entitled to receive any further severance pay, notice, pay in lieu of notice, compensation or damages of any other kind, including reasonable notice at common law.

5(c) states "if a term is found to be unenforceable, the remainder will remain in affect".

Also can the same contract require the employee to give at least 2 weeks notice or is that too one sided?

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2 Answers 2

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is this enforceable?

Yes. There is nothing wrong with that clause. The contract even contains the redundant terms of 5(c). It is unclear why you think the clause might be unenforceable. I'm assuming you already read the Employment Standards Act that is mentioned in the clause.

can the same contract require the employee to give at least 2 weeks notice or is that too one sided?

Your acceptance of that clause will evidence that it is not too one sided. An employee's acceptance of terms which are clearly more advantageous to the employer simply is one consequence of the parties' freedom of contract. There is no legal requirement that the terms of the contract be equally favorable to the parties.

The disparity regarding notice period is neither unconscionable nor contrary to public policy so as to be stricken as unenforceable or as null & void.

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  • Perhaps it doesn't affect anything but I made a typo: the word "common" was missing from common law. I was wondering if this was legal for a contract to override common law?
    – oneonetwothree
    Commented Nov 15, 2020 at 13:25
  • @oneonetwothree Yes. Reference to the Employment Standards Act suggests that under that contract the "minimums are met, [whence] the parties can agree to a notice period that would supersede any common law entitlement". See here. Also Facility Constr. Mgmt, Inc. v. Ahrens Concrete Floors, Inc., (U.S. Dist. Court, GA., 2010) lists rulings/precedents in the sense that "the express terms of [a] contract supersede the common law" (brackets in orig.).
    – Iñaki Viggers
    Commented Nov 15, 2020 at 14:27
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    This answer may not be accurate under Canadian law and the Ontario Employment Standards Act in particular. The OP did not disclose province.
    – Chris W. Rea
    Commented Mar 30, 2021 at 20:35
  • @ChrisW.Rea "This answer may not be accurate under Canadian law". I just commented in your answer why this is not the case: The contract incorporates the ESA. The company would err only by not performing the termination clause, but the clause itself is not inherently wrong or unlawful.
    – Iñaki Viggers
    Commented Mar 30, 2021 at 21:19
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Speaking from the perspective of law in Ontario, Canada, the clause may indeed be defective, contrary to the currently accepted answer. Consider what is mentioned at Termination Clauses and Continuation of Benefits: A Warning and Reminder for Employers in Ontario (August 2015):

Employers often seek to limit their termination liability with termination clauses. If a termination clause does not meet the minimum requirements of the Employment Standards Act, 2000 (“ESA”), then the termination clause will not be valid and an employee will be entitled to reasonable notice at common law, thus increasing an employer’s liability [...]

[...]

The ESA requires employers to continue benefits during the ESA notice period when terminating employment without cause, whether or not working notice is provided. Where an employer fails to expressly state in a contract that an employee’s benefits will continue throughout the ESA notice period, the termination clause may be unenforceable.

[...]

In Stevens v Sifton Properties Limited (2012, ONSC) (“Stevens”), the termination clause stated that payment in lieu of notice in accordance with the ESA would be provided where the employer terminates the relationship without cause. The termination clause stipulated that such payment satisfied all future claims against the employer. The Court determined that the clause, in addressing benefits implicitly, did so in a way that “purports to take those [rights of benefits] away upon mere payment of the required pay in lieu of notice.” The Court held that this was contrary to the ESA, as the language denied benefit continuation during the ESA notice period and the termination clause was therefore void.

Also, on the saving clause attempt, see Ontario Court of Appeal rules “saving clause” in employment agreement unenforceable (December 2019).

Consider what's mentioned in Why employment contracts are now being rewritten all over the country (December, 2020):

The Court of Appeal for Ontario has determined that all ambiguous language must be read in the employee’s favour and the presence of ambiguity will nullify a termination provision. Any ambiguity will be fatal. For example, simply stating that the employee will get the greater of their employment standards entitlements or some greater amount, if not worded precisely and correctly, will not hold up because the courts will find the language to be ambiguous.

Also, see Ontario Court of Appeal Limits Severability of Termination Clauses in Employment Contracts (August 2020), which says:

In addition, the Court of Appeal refused to give effect to the employment contract’s severability clause. The Court stated that a severability clause cannot affect clauses that have been made void by statute. Having concluded that the termination provisions must be considered together, the severability clause in this case could not be applied to sever the offending “for cause” portion of the termination provisions.

All emphasis above is mine. I am not a lawyer.

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  • The language of the contract is circular, but not really defective. Paragraph 5(c) readily portrays the company's willingness to cure any compliance shortcomings regarding the OP's "entitle[ment] under the Employment Standards Act". The contract is explicit about acknowledging/incorporating the ESA.
    – Iñaki Viggers
    Commented Mar 30, 2021 at 21:15
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    @IñakiViggers Disagree. The example termination clause is not likely to protect the employer from a reasonable notice claim in Ontario, Canada. You're trying to interpret the language in the clause in isolation but ignoring the actual case law that applies to such clauses in my province.
    – Chris W. Rea
    Commented Mar 30, 2021 at 21:59
  • I've added something that specifically discusses how severability clauses, such as the 5(c) mentioned, wouldn't cure the defect.
    – Chris W. Rea
    Commented Mar 30, 2021 at 22:23
  • It is contradictory for the source from financialpost.com to say that an ambiguity will be interpreted [in employee's favor] and also nullified. This article points out that "Stevens took an overly narrow and impractical analysis" and "does not reflect a consensus amongst the judiciary". The first alternative suggestion in the last paragraph of that article reinforces my point insofar as the OP's clause incorporates the "entitlements" under the ESA.
    – Iñaki Viggers
    Commented Mar 31, 2021 at 11:44
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    @IñakiViggers The Ontario Court of Appeal in its later decisions, as implicitly confirmed by the Supreme Court this year, has held that incorporation of ESA in one clause alone isn't enough to save the agreement and may make the whole termination provisions unenforceable and common law standards will kick in unless the termination clause can be reasonably read to favour the employee and provide the employee with greater benefits. See other articles provided in the answer, not just one decision nine years ago that may or may not have some defects.
    – xngtng
    Commented Mar 31, 2021 at 16:25

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