On September 27, 2019, the Ontario Superior Court of Justice released a significant decision in Groves v UTS Consultants Inc, a case argued by Karimjee Law.
The central issue revolved around the termination provision in the employee’s contract and a release. If found valid, the employee would only receive limited pay in lieu of notice, and not his much more generous common law notice entitlements.
Of note, the decision dealt directly with a “saving provision” in the employment contract. Essentially, savings provisions state that even if a termination clause could breach the Employment Standards Act (“ESA”), the clause should be saved by interpreting it in a way that is consistent with the ESA. The Groves decision significantly limits the viability of generic savings provisions.
After finding that the termination provision breached the ESA, the Court in Groves turned its attention to the saving provision, which stated:
Notwithstanding the foregoing, the Company guarantees that the amounts payable upon termination, without cause, shall not be less than that required under the notice and severance provisions of the Employment Standard Act (Ontario).
Despite this language, Justice Nishikawa found that the termination provision was not remedied, commenting:
. . . when the employer has sought to contract out of the ESA, a saving provision cannot be used to rewrite the express language in an agreement to cause it to comply . . . As a result, the saving clause does not assist and the Termination Provision cannot be read up in order to bring it into compliance with the ESA. This reasoning will be beneficial to similarly-situated employees arguing that the saving provision doesn’t actually “save” anything.
The case is currently in the midst of being appealed.