Cannot Contract Out Of Continuous Service Provision in the ESA:

The Ontario Court of Appeal in Kerzner v American Iron & Metal Co. ( 2018 ONCA 989) had a situation where an employee (who was also a 1/3 owner of the vendor ) sold his shares to a new owner and signed a release in favour of the new owner. He went onto to be employed under a new written contract of employment for 7 more years.

The new employment contract had a termination clause requiring 26 weeks notice. The Court held that under the ESA his seniority goes back to 1980 when he joined the vendor and that the parties could not agree otherwise as this would be an illegal attempt to contract out of the Act. As under the Act his entitlement to both termination and severance pay was 34 weeks, the 26 week termination clause was illegal.

However because the release was still valid, in considering his common law entitlement to reasonable notice, his service was from the time of the sale, a mere 7 years. He was awarded 7 months notice, even though he was age 58 and held a senior position. The Court noted that he got a new job within 2 months.