On January 14, 2021, the Supreme Court of Canada released its judgment denying leave to appeal Waksdale v Swegon North America Inc [Waksdale], a bombshell decision by the Ontario Court of Appeal (“ONCA”) which has likely rendered termination clauses in many existing employment agreements invalid. As a result, Waksdale will govern enforceability of termination clauses in Ontario for the foreseeable future.
In Waksdale, the ONCA held that “without cause” and “with cause” termination provisions in an employment agreement must be read together. Consequently, if one provision violates the Employment Standards Act, 2000, then both provisions are unenforceable. This is the case even if one provision is otherwise enforceable, and even if the provisions are separate and located in different places within the employment agreement.
Waksdale was later relied on in Sewell v Provincial Fruit Co Limited [Sewell], a decision by the Ontario Superior Court of Justice, to similarly invalidate the termination clauses at issue in the case.
We encourage you to review our blog post on Waksdale and our blog post on Sewell for detailed analyses of these decisions, including their implications for employers.
Employers are strongly advised to obtain legal advice regarding the enforceability of their termination clauses, as it appears that Waksdale is here to stay. As always, our lawyers remain ready to assist you in reviewing your existing employment agreements and/or in strategically implementing new and enforceable employment agreements in your workplace.
This blog is provided as an information service and summary of workplace legal issues.
This information is not intended as legal advice.
