Ontario Court Upholds Employment Agreement Provision that Limited Employee’s Notice of Termination to Statutory Minimum.

In Oudin v. Le Centre Francophone de Toronto, The Ontario Superior Court dismissed a motion for summary judgment brought by an employee who alleged that the termination provision in his employment agreement was unenforceable. This provision limited his entitlement to notice of termination to the minimum required by employment standards legislation. The court did find that a related provision in the employment agreement violated the legislation and was invalid; however, the judge held that the invalid provision could be excised pursuant to a severability clause in the agreement without affecting the integrity of the remainder of the agreement and therefore the termination provision could stand.

The employee worked for Le Centre Francophone de Toronto (CFT), a non-profit organization, since late 2000. He was a perpetual one-year contract employee until June 15, 2007 when he signed an indefinite term employment agreement. The Agreement included three provisions which became the focus of the lawsuit in that they allowed CFT to terminate the employee in a situation where they were in “continuing incapacity considered permanent” (clause 4).

The employee relied on Machtinger v. HOJ Industries, In which the SCC stated that “[i]f a clause in an employment contract is rendered ‘null and void’ by operation of employment standards legislation, then it is null and void for all purposes, and cannot be used as evidence of the parties’ intention to displace the common law presumption of reasonable notice.” The employee submitted that since a provision of the contract violated the code by including a disability,  “continued incapacity considered permanent”, as grounds for termination, then the notice provisions were also invalid..

While the court agreed section 4 violated the code, they relied on a unique severability provision to save the notice provision – that provisions directed a court to eliminate any illegal provisions in order “save” the rest of the contract. The court found this was enough to show the parties intended the agreements to be valid, despite code violations that may arise.

Written with the assistance of Andrew Bigioni, articling student.