Ontario Court of Appeal Judgment a Reminder of the Importance of Carefully Drafted Termination Clauses

10.3.17

In a recent decision, Wood v. Fred Deeley Imports Ltd., 2017 ONCA 158, the Ontario Court of Appeal reversed a 2016 judgment of the Ontario Superior Court of Justice that had found a termination clause in an employee’s employment agreement enforceable. The consequence for the employer was that, instead of 13 weeks’ working notice and a lump sum equivalent to eight weeks’ pay, the employee was entitled to nine months’ reasonable notice.

Important takeaway from the decision:

a carefully drafted termination clause that provides an employee with at least his or her minimum entitlements under the applicable employment standards legislation is important where the employer wants to avoid the risk of having to pay the employee reasonable notice of termination at common law upon termination of the employee’s employment. 

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