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Jul 24, 2023

Although a termination clause may initially be enforceable, as time passes and the employment relationship changes, a termination clause may lose its enforceability.

The enforceability of a termination clause is important as it may limit an employee’s entitlements upon termination to only their minimum entitlements under employment standards legislation rather than their common law notice entitlements, which could be up to 24 months of notice or greater.

The following are some of the ways in which a termination clause can lose its enforceability over time:

Change substratum doctrine

The change substratum doctrine provides that if an employee enters into an employment contract that contains a termination clause which specifies the notice period for a dismissal, the termination clause is not enforceable, if over the course of employment, the important terms of the agreement concerning the employee’s responsibilities and status has significantly changed.

The idea behind the changed substratum doctrine is that with promotions and greater job responsibilities, the substratum of the original employment contract has changed and the termination clause in the original employment contract should be nullified.

This doctrine was recently applied in the decision of Celestini v. Shoplogix Inc., 2023 ONCA 131, where the Ontario Court of Appeal addressed the changed substratum doctrine to...

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