Employment lawyer sums up where things stand with termination clauses
If an employee has a written employment contract, that contract likely contains provisions on how much notice of termination, or pay in lieu of notice of termination (often referred to as severance pay), that the employer must provide. Generally, employers are permitted to have such provisions in employment contracts, but there are some limits.
In brief, in Machtinger v. HOJ Industries Ltd., [1992] 1 SCR 986, the Supreme Court of Canada held that notice of termination clauses must be compliant with the relevant employment standards legislation’s minimum requirements. The top court started by holding that there is a presumption in employment contracts that employers must give their employees reasonable notice of termination, or pay in lieu of notice. The court then held that employment standards legislation does not rebut that presumption, but parties can include contractual terms which would.
The Supreme Court added that employers can limit the notice of termination with express terms in an employment agreement. However, the top court continued by stating that if the contractual notice provisions are less than the relevant employment standards legislation, those contractual notice provisions are void for violating public policy.
The Supreme Court in Machtinger also ruled that parties could incorporate employment standards legislation notice provisions into the contract by referring to the relevant...
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