A Small Claims Court judge found the termination provision in an employee’s contract to be void for limiting benefits continuation, which violated Ontario’s Employment Standards Act.
The decision was unreported, but as prominent mediator Barry Fisher notes in his summary, the termination provision stated that benefits would continue “for such period as the Employment Standards Act, 2000 shall require” with the caveat “provided such coverage is available from the insurer.” The Employment Standards Act requires continuity of benefits or pay in lieu of such benefits regardless of the insurer’s position on the matter.
Under s. 60 of the ESA, Ontario employers must continue benefits contributions during the minimum statutory notice or risk liability for uncovered losses.
Employees in Ontario have had great success challenging termination clauses, specially since the 2020 landmark Waksdale v. Swegon North America Inc., which concluded that all termination provisions (just cause and without cause) are invalidated if any single part violates the ESA.
Employers are advised to have their employment contracts reviewed regularly by legal counsel to ensure that every word in their contracts complies with the Employment Standards Act, 2000 and current judicial interpretation.
Employees are advised to seek legal counsel if terminated as in the majority of cases, there is a flaw in their termination provision that allows them to seek a larger severance package.
