Waksdale and the Termination Clauses That Don’t Hold Up: Why Most Ontario Employment Contracts Fail
Most Ontario employment contracts contain a termination clause meant to limit the employer’s payout to the Employment Standards Act minimums. After Waksdale...
Frequently Asked Questions
What did Waksdale v. Swegon actually decide?
In Waksdale v. Swegon North America Inc., 2020 ONCA 391, the Ontario Court of Appeal held that termination provisions in an employment contract must be read as a whole. If any part of the termination scheme — typically the “Termination for Cause” sub-clause — violates the Employment Standards Act, the entire termination scheme is unenforceable, even if the employee was not actually dismissed for cause. When the scheme falls, common-law Bardal reasonable notice applies.
Why do “Termination for Cause” clauses usually violate the ESA?
Because the bar for common-law just cause is lower than the ESA “wilful misconduct” standard in Regulation 288/01. There are cases where an employer has just cause at common law but does not meet the ESA wilful-misconduct test — in those cases, the ESA minimums are still owed. A clause that says “no notice or pay for cause” attempts to contract out of the ESA minimums in that gap, which the ESA prohibits under section 5(1). The clause is therefore void.
Does a saving clause fix the problem?
Sometimes, but not reliably. Some Ontario courts have accepted broadly-worded saving clauses; others have rejected them on the basis that an ESA-violating clause cannot be cured by a generic disclaimer. The drafting details matter. The presence of a saving clause does not automatically save the contract — every termination clause needs to be reviewed independently.
My employment contract was signed before Waksdale. Does it still apply to me?
Yes. Waksdale is a statement of how Ontario courts interpret termination clauses. It applies to contracts that are interpreted by a court today, regardless of when the contract was signed. Many pre-2020 contracts that were once assumed to be enforceable are now vulnerable.
Should I sign the release the employer gave me?
Not without having the termination clause reviewed first. Signing the release waives your right to claim more than the offered amount. The ESA minimums are owed regardless of whether you sign. The most important practical step is to have the termination clause and the release reviewed before you sign — the deadline imposed in the termination letter is almost always negotiable.
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