Court’s Enforce Termination Clause in Employment Contract

In the case of Oudin v. Francophone de Toronto, the Ontario Court of Appeal upheld the decision of the Superior Court of Justice to enforce the termination provision contained in the written contract of employment which limited the plaintiff’s entitlement upon termination without cause to the minimum requirements set out in the Employment Standards Act, 2000 (ESA).

Francois Oudin was employed with Toronto Francophone’s Centre’s (the “Centre”) in the capacity of project manager. Oudin commenced his employment in 2000 pursuant to one-year fixed term contract that was continuously renewed. In 2006, Oudin and the Centre entered into an indefinite fix term contract. The indefinite term contract contained, among other things, a provision that limited Oudin’s entitlement upon termination without cause.

On September 25, 2013, the Centre terminated Oudin’s employment without cause. At the time of termination, Oudin had nearly completed 13 years of service with the Centre and he was 68 years old. In accordance with the employment contract, the Centre provided Oudin 21 weeks of severance and termination pay. The Centre also offered Oudin and additional 12 weeks of salary and benefits coverage if he signed a release in favour of the Centre. Oudin declined the Centre’s offer and did not sign the release, and he civil suit.

On a motion for summary judgment, the motion judge ruled that the notwithstanding language in the employment contract that was unenforceable, the waiver and severability provision therein was enforceable and that when interpreting the contract the court must consider the true intentions of the parties at the time the contract was signed. Thus, the motion judge held that the parties’ intentions in this case was to be bound by the ESA minimum requirements upon termination without cause, and therefore, the motion judge found in favour of the Centre.

The Court of Appeal for Ontario heard the appeal of Oudin and ruled that deference should be given to the motion judge’s interpretation of the contract; that there was no attempt to contract out of the ESA; and that the parties agreed that the ESA would be respected. For these reasons, the appeal was dismissed.

The Oudin decision demonstrates a shift in the court to consider the employer’s and employee’s intentions at the time the contract for employment was signed when deciding whether or not to enforce provisions that limits employee’s entitlement upon termination of employment without cause. Even though this decision was in favour of the employee, it is important that employer’s prepare clear and unambiguous employment contracts which do not require the court to consider the contractual parties intentions at the time the contract was entered into. If there is ambiguity, the courts are likely not to enforce those ambiguous provisions.

Prepared by Olanyi Parsons, B.A. (Hons.) LL.B.

For a consultation, please feel free to contact Olanyi Parsons Law.

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