In the recent case of Taylor v Salytics Inc., 2025 ONSC 3461, the Superior Court of Justice (the “Court”) held that the enforceability of termination provisions in an employment contract does not impact the enforceability of layoff provisions. Despite the unenforceable termination provision, the Court held that Salytics Inc. retained the contractual right to lay the Plaintiff off, such that he was not constructively dismissed.
This decision reassures employers that a properly drafted layoff provision is not a termination clause and remains enforceable even if the termination provisions are invalid. This allows employers to rely on layoff provisions to place employees on a temporary layoff without automatically risking constructive dismissal claims.
In early 2024, Salytics Inc. experienced financial difficulties. Mr. Taylor first entered into an agreement for reduced hours and wages, before being placed on temporary layoff effective three weeks later, on April 1, 2024. He had been employed by Salytics Inc. for approximately 11 years, and was working as a Senior Technical Consultant at the time. His employment contract contained the following provision:
Termination
Salytics may terminate your employment at any time for cause.
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