The recent Ontario case of Dufault v. The Corporation of the Township of Ignace, 2024 ONSC 1029, adjudicated by Justice Pierce of the Ontario Superior Court of Justice, casts a spotlight on the criticality of drafting employment contracts compliant with the Employment Standards Act (ESA). This case has become a pivotal reference point in employment law, illustrating the repercussions of poorly constructed termination clauses within employment agreements.
In this specific case, the termination clause in question stated that the employer could terminate employment at its “sole discretion and without cause…at any time” by paying “base salary…payable in bi-weekly installments…subject at all times to the provisions of the Employment Standards Act, 2000.”
However, Justice Pierce found this clause to violate the ESA on several fronts, notably the differentiation between “base salary” and “regular wages” as defined by the ESA, the option for the employer to pay severance in installments, and the employer’s unilateral discretion to terminate employment at “any time,” which contravened specific sections of the ESA.
