Supreme Court of Canada will not hear the Appeal of the ‘Curative’ Clause

In our summer 2016 edition of EMPLAWYERS’ Update, we reported on Oudin v Centre Francophone de Toronto, in which the Ontario Court of Appeal upheld a termination clause, despite finding that some of its provisions violated the Employment Standards Act, 2000 (“ESA”). On February 2, 2017, the Supreme Court of Canada dismissed the employee’s Application for Leave to Appeal.

As you may recall, the employee, Mr. Oudin, brought an action against his former employer, Centre Francophone de Toronto, for wrongful dismissal and argued that the termination clause in his employment contract was unenforceable as it did not provide for the minimum statutory entitlements set out in the ESA.

The Ontario Superior Court of Justice and the Court of Appeal determined that the termination clause was valid in light of other language contained in the employment agreement stating that, in the event that a term of the contract violated the ESA, the term would either be modified to render it compliant or excised completely while leaving the remainder of the contract intact:

If any of the provisions of the present agreement is invalid or unable to be performed by virtue of any law, regulation, order or any other requirement or other principle of law, this modality shall in such case be considered to be modified or nullified, but only to the extent necessary to comply with the statute, regulation, order, legal requirement or principle and the other dispositions of the present agreement shall remain in force.

In light of this “curative language”, the Court found that there had been no attempt to contract out of the ESA.

The decision of the Court of Appeal can be relied upon in cases where the termination clause is deficient and there is “curative” language similar to the one found in Oudin. As of the date of the publication of this article, no courts have interpreted the impact of Oudin on employment contracts containing severability clauses; however, Bird Richard will keep you updated on whether the Courts will be inclined to uphold termination clauses in the future where this type of “curative language” is present.