Ontario Court of Appeal Upholds ESA Only Clause With Little Comment:

The Ontario Court of Appeal in Oudin v Le Centre Francophone de Toronto, Inc. ( 2016 ONCA 514 ) upheld the trial decision of Dunphy J. which I reviewed on November 16, 2015 under the title “Waiver and Severability Clause Cures All Defects in Employer Contract”.

In my previous blog I was critical of the Judge’s use of a vague waiver and severability clause to cure multiple defects in a ESA only termination clause.

Although this issue was a major point on the appeal, the Court did not even address this issue in their short four page endorsement other than to say that ” The motion judge’s interpretation of the contract is entitled to deference.”

It is very unfortunate that the Court of Appeal did not use this opportunity to clarify the many conflicting cases on the enforceability of these ESA clauses. The issues regarding these clauses deal with the following issues :

1) Does the agreement have to make specific reference to benefits ?

2) Does the agreement have to make specific reference to severance pay ?

3)  Does there have to be a provision which  explains that the plaintiff is limited to these termination benefits and that he has explicitly given up his right to common law reasonable notice ?

4) Does a just cause provision breach the rule that under the ESA there is a higher standard of wilful misconduct ?

5) Does the agreement have to make specific reference that the employee is also entitled to vacation pay on the termination pay ?

6) If the clause requires the employee to sign a release before receiving any payments , is the clause invalid?

7) If the clause gives the employer the right to have the employee work out both the termination pay period and the severance pay “period” , is the clause invalid?

8) To what degree, if any, does the employer need to prove that the termination clause was brought to the attention of the employee at the time of hiring ?

9) Are employees deemed to know exactly what the termination provisions of the ESA are and therefore what the employee is giving up by signing the agreement?

10) What if the person signing this agreement on behalf of the employer also does not know what the ESA provides for ? Can there be a meeting of the minds when neither party understands what they are signing?

11) Does a waiver and severability clause cure all defects in the agreement or does this offend the “no blue pencil ” rule set out by the Supreme Court of Canada ?

12) What if the clause  does not even properly refer to the Employment Standards Act, 2000 ? Are laymen supposed to figure out which statute applies to their situation? What if the employer references the wrong section of the ESA?

13) As employment contracts are usually between parties of grossly unequal bargaining power, should the doctrine of good faith administration of a contract require the employer to obtain from an employee a Certificate of Independent Legal Advice as a condition precedent to enforcing a ESA only termination clause ?

I sincerely hope that this case finds it way to the Supreme Court of Canada and that they take the opportunity to give the public ( who at the end of the day consists almost entirely of employers and employees) some well needed guidance  on this important issue affecting all of Canada , except Quebec. In the Quebec Civil Code there is an express provision providing that all termination clauses must be reasonable and thus the Court can overrule any termination provision  that the Court finds is unreasonable. Vive La Difference!




329 thoughts on “Ontario Court of Appeal Upholds ESA Only Clause With Little Comment:”

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