The Enforceability of Termination Clauses and the Waiver of Common Law Notice

On May 5, 2019, the Ontario Court of Appeal released the Ariss v. NORR Limited Architects & Engineers decision. The majority decision from the Court of Appeal is an important decision for employers regarding the enforceability of termination clause in employment agreements.

In 2002, NORR acquired the company that employed Mr. Ariss and continued his employment, which had commenced in 1986. Mr. Ariss signed an employment contract. Mr. Ariss acknowledged that he had read, understood and accepted the offer of employment which included a provision that purported to limit notice and severance entitlements to the minimum statutory provisions of the Ontario Employment Standards Act, 2000 (the “ESA”).

In 2006, Mr. Ariss signed a new employment contract, which contained similar provisions that limited entitlements upon termination to the ESA. Mr. Ariss agreed that he had read and understood the provisions which, again, included a waiver of his common law entitlements to reasonable notice at common law.

In 2013, Mr. Ariss raised the possibility of reducing his hours to part-time hours. On July 31, 2013, the employer provided Mr. Ariss with an “Offer of Casual Employment”, which contained the following provision: “Either party may terminate this agreement by providing the minimum notice required under the Employment Standards Act of Ontario.”

NORR terminated Mr. Ariss’ employment on January 26, 2016. NORR did not recognize his 30 years of service, and instead gave him 3.5 weeks’ notice of termination based on his part-time service from July 2013. No severance pay was paid. On a motion for summary judgement, the Court agreed with Mr. Ariss that he had been continuously employed for approximately 30 years (rejecting the employer’s argument that he had resigned in 2013) and NORR was required to pay him additional statutory payments arising from his termination. Specifically, he was entitled to 8 weeks of termination pay and 26 weeks of severance pay as required under the ESA. At the same time, however, and most importantly for employers, the motions court held that Mr. Ariss had clearly and unequivocally waived any entitlement to reasonable notice at common law and limited any claim to his statutory entitlements.

The Court of Appeal unanimously agreed with the lower court that the employee clearly and unequivocally waived his entitlement to reasonable notice at common law. This waiver was reinforced by the various agreements that were accepted throughout the employment relationship. There was no basis to interfere with the employee’s waiver of the common law entitlement to reasonable notice. For employers, the Court of Appeal has confirmed the basic and well-established principle that employment agreements may clearly limit an employee’s entitlements upon termination to the minimum statutory requirements as contained in the ESA. If you have any questions about your employment agreements or the enforceability of termination provisions in your employment contracts, please do not hesitate to contact us.