The law on the enforceability of employment contracts, and specifically termination clauses, has changed significantly over the past several years, and last year was no exception.
In 2019, the Ontario Court of Appeal took a closer look at “saving provisions”, which are often included in employment contracts to make sure that, if all else fails, the contract, and specifically the termination clause, is still compliant with the Employment Standards Act, 2000 (the “ESA”). If a termination provision provides for less than the minimum entitlements prescribed by the ESA, it is unenforceable, and the employee will then be entitled to reasonable notice in accordance with the common law, which is typically much greater. Although these failsafe provisions are often relied upon as a cure-all for an otherwise unenforceable termination clause, the Court of Appeal’s decision in Rossman v. Canadian Solar Inc., 2019 ONCA 992 (“Rossman”), has cast some doubt on the utility of these clauses.
In Rossman, the employee’s employment contract included a saving provision which stated: “In the event the minimum statutory requirements as at the date of termination provide for any greater right or benefit than that provided in this agreement, such statutory requirements will replace the notice or payments in lieu of notice contemplated under this agreement.” The contract also included language which purported to provide Mr. Rossman with less than his ESA entitlements by stating that continuation of his benefits post-termination would cease after four weeks, regardless of his length of service and notwithstanding the requirement under the ESA that benefits be maintained during the entire statutory notice period, which could be up to eight weeks.
The lower Court held that the limit of four weeks of benefit continuance either created ambiguity, as it flew in the face of the saving provision, or it was an attempt to contract out of the ESA. The Court therefore held that the clause was unenforceable. The Court of Appeal agreed that the clause was ambiguous, and that this ambiguity was not erased by the saving provision. The initial ‘ESA trumps’ language was in direct contrast with the ‘but nothing above four weeks’ language, which created confusion and uncertainty for the employee, who was entitled to know at the beginning of his employment what his entitlements would be at the end of his employment.
The Court concluded with a cautionary message to employers about saving provisions:
 I make a final observation. Employees need to know the conditions, including entitlements, of their employment with certainty. This is especially so with respect to an employee’s termination – a fragile moment of stress and uncertainty.
 In this context, saving provisions in termination clauses cannot save employers who attempt to contract out of the ESA’s minimum standards. Holding otherwise creates the risk employers will slip sentences, like the four-week benefits clause, into employment contracts in the hope that employees will accept the terms. This outcome exploits vulnerable employees who hold unequal bargaining power in contract negotiations. Moreover, it flouts the purpose of the ESA – to protect employees and to ensure that employers treat them fairly upon termination: Machtinger, at pp. 1002-3.
 While employers are entitled to contractually amend the ESA’s notice requirements, as long as they respect the minimum standards, they are not entitled to offend them. Employers must have an incentive to comply with the ESA’s minimum notice requirements. They cannot be permitted to draft provisions that capitalize on the fact many employees are unaware of their legal rights and will often refrain from challenging notice provisions in court: Machtinger, at p. 1004. Attempting to reconcile the provisions of the Termination Clause with the benefit of hindsight runs counter to the remedial purpose of the ESA. (emphasis added)
It is clear from this decision that courts will not accept a saving provision without scrutiny. If the clause creates ambiguity by pairing failsafe language with an attempt to contract out of the ESA, the failsafe language may not serve its purpose, i.e. to save the termination clause. In the absence of an enforceable termination clause, an employee’s entitlements upon termination could be substantially higher.