Employment Standards Act, 2000 (the “ESA”), Baker confirms that courts should enforce a termination provision where, when read as a whole and in light of a contract’s surrounding circumstances, it reflects an intention to comply with the ESA’s minimum standards. We have written previously on the challenges of enforcing termination of employment provisions to the exclusion of common law reasonable notice entitlements here.
Below we cover why this case matters, the applicable interpretative framework and practical drafting lessons for employers.
Why This Case Matters
After a period of inconsistent jurisprudence, Baker clarifies the proper approach for evaluating the enforceability of termination provisions in an employment contract. Following the Baker decision, employers in Ontario should review and, if necessary, update the termination provisions in their employment agreements to ensure the provisions and the contract as a whole demonstrate an intention to comply with the ESA.
The Proper Interpretative Framework
Ontario courts have typically favoured interpretations of employment agreements that protect employees, reflecting the presumption of unequal bargaining power between employer and employee. But employment agreements are still contracts, and modern contractual interpretation principles apply. In Baker, the Court of Appeal explained that the proper approach is to identify the parties’ objective intentions from the wording of the contract as a whole, understood in...
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