Saturday 14 October 2023

Illegal Termination Provision Buried in Confidentiality Clause Voids Otherwise Valid Termination Clause

If an employment contract contains language that purports to allow the employer to terminate an employee for cause- and such language contravenes Ontario’s Employment Standards Act- does it matter where such language appears within the contract?

In Henderson v. Slavkin et al., 2022 ONSC 2964, Justice Carole J. Brown of the Ontario Superior Court of Justice rightly found that it does not matter where within the employment contract the offending language is found- if the language is illegal, then it voids the whole of the termination provision.


Henderson v. Slavkin et al. is an excellent decision that canvasses a lot of issues, including the ways by which an employer can implement fundamental changes to the terms of its employment contracts. For those of us who draft employment contracts, the decision is a frustrating tale of the employer getting almost everything right, but neglecting to turn over every single possible rock.

The defendants, Dr. David Slavkin and Dr. Melvyn Kellner, operated oral surgery dental offices in the Greater Toronto Area. Both doctors are now retired. Dr. Slavkin retired on December 31, 2020 and Dr. Kellner on April 28, 2021.

The plaintiff, Rose Henderson, was the receptionist at the Bolton office. She commenced employment with the defendants in April 1990. Her employment terminated on April 30, 2020. She had been a loyal and dedicated employee throughout her employment, which was reflected in the letter of reference provided by her employers at the time of her termination.

In 2015, Dr. Slavkin and Dr. Kellner began to make plans for their future retirement. They reduced their hours worked per week. They had hoped that they might sell to another oral surgeon.

Given their plans to retire, the defendants sought to implement employment contracts so that the employees would know what they could expect from the defendants’ impending retirements. On May 26, 2015, the defendants offered all of the staff employed by them, including the plaintiff, new employment contracts. There had not previously been written contracts. These new employment contracts were accompanied by an explanatory letter.

The letter sent to the plaintiff read as follows:

It has become necessary for the Practice to adopt new employment policies. While neither of us has any immediate plans for retirement, you are all aware that we are both of advancing age and there may have been uncertainty as to future working conditions, hours, and/or terms of employment. We appreciate and look forward to your continued employment with the Practice, and this is not a reflection of your value to the practice

You have two choices as to how your agreement will be implemented. The first choice is that we are prepared to pay you $500.00 for your signature on the enclosed letter agreement. If you are not prepared to sign the agreement in exchange for the $500.00 payment, then we are herein providing you with actual working notice (based on the length of your employment here) that effective May 26, 2017 your employment on your current terms will terminate and you will be offered a contract in the wording attached. If at that point you are not prepared to sign the letter agreement, then your employment with us will terminate effective May 26, 2017.

We are taking these steps to protect the practice goodwill and to provide clarity and stability in the workplace. We look forward to discussing this with you.

The new employment agreement accompanied the letter. The three clauses of that employment agreement which the plaintiff asserted are illegal are paragraphs 13, 18 and 19, which read as follows:

13. Your employment may be terminated without cause for any reason upon the provision of notice equal to the minimum notice or pay in lieu of notice and any other benefits required to be paid under the terms of the Employment Standards Act, if any. By signing below, you agree that upon receipt of your entitlement under the Employment Standards Act, no further amount shall be due and payable to you, whether under the Employment Standards Act, any other statute or common law.

18. Conflict of Interest. You agree that you will ensure that your direct or indirect personal interests do not, whether potentially or actually, conflict with the Employer’s interests. You further covenant and agree to promptly report any potential or actual conflicts of interest to the employer. A conflict of interest includes, but is not expressly limited to the following:

(a) Private or financial interest in an organization with which does business [sic] or which competes with our business interests;

(b) A private or financial interest, direct or indirect, in any concern or activity of ours of which you are aware or ought reasonably to be aware;

(c) Financial interests include the financial interest of your parent, spouse, partner, child or relative, a private corporation of which the [sic] you are a shareholder, director or senior officer, and a partner or other employer;

(d) Engage in unacceptable conduct, including but not limited to soliciting patients for dental work, which could jeopardize the patient’s relationship with us.

A failure to comply with this clause above constitutes both a breach of this agreement and cause for termination without notice or compensation in lieu of notice.

19. Confidential Information. You recognize that in the performance of your duties, you will acquire detailed and confidential knowledge of our business, patient information, and other confidential information, documents, and records. You agree that you will not in any way use, disclose, copy, reproduce, remove or make accessible to any person or other third party, either during your employment or any time thereafter, any confidential information relating to our business, including office forms, instruction sheets, standard form letters to patients or other documents drafted and utilized in the Employer’s practice except as required by law or as required in the performance of your job duties.

For clarity, confidential information includes, without limitation, all information (in written, oral, tape, cd rom, diskette, and USB keys or any electronic form) which relates to the business, affairs, properties, assets, financial condition and plans, concerning or relating to the Employer, our dental practice or patients and specifically includes all records, patient files, patient lists, patient names, patient addresses, patient telephone numbers, email addresses, invoices and/or statements, daily appointment sheets, radiographs, marketing information and strategies, advertising information and strategies, and financial information,

In the event that you breach this clause while employed by the Employer, your employment will be terminated without notice or compensation in lieu thereof, for cause.

This provision shall survive the termination of this Agreement.

Ms. Henderson signed the agreement two days later. She continued her work with the defendants in her position as receptionist.

In January 2019, the defendants closed the office in the GTA, leaving the Bolton clinic as the only office left. By February 2019, Dr. Kellner had reduced his office hours to 2.5 days per week. In the late spring of 2019, Dr. Slavkin announced that he would retire effective August 26, 2019.

In October 2019, the defendants determined that they could not feasibly sell their practice.

On November 1, 2019, the defendants convened a meeting of all staff to advise that Dr. Kellner would be retiring in March 2020 - Dr. Slavkin having already retired - and that all staffs’ employment would terminate on that date. At the meeting, the defendants provided to all staff, including the plaintiff, confirmation in writing of the termination of their employment effective April 30, 2020.

The plaintiff, in accordance with her working notice of six months, continued to work until February 2020. After that time, she went on a preplanned vacation. Thereafter, she went on paid sick leave. Throughout this, she was paid her full salary by the defendants.

Thereafter, and notwithstanding the fact that: (a) pursuant to the terms of her employment contract and the ESA, Ms Henderson was entitled to only eight weeks’ notice of termination, and (b) Ms. Henderson had, in fact, received six months’ notice of termination, Ms Henderson commenced her claim against her former employers for wrongful dismissal.

Ms Henderson’s position was that the contract of employment which she was asked to sign in 2015 was unconscionable, contained provisions that were contrary to the Employment Standards Act, , the Occupational Health and Safety Act, and/or the Human Rights Code, and therefore illegal, and that, as a result, she was wrongfully terminated. She argued that the employment contract must be set aside and, as a result, she was entitled to common-law damages.

Decision of the Ontario Superior Court

In allowing Ms Henderson’s claim, Justice Brown correctly started from the position that, where an employment agreement is not consistent with the ESA, it becomes invalid irrespective of the actual arrangements made with an employee on termination, and the terminated employee becomes entitled to common-law damages. (Para 26.)

It is important to observe that Ms Henderson does not appear to have argued that the employment contract ought to have failed for want of consideration. As canvassed in my post The Legality of Taking Away Paid Breaks and Benefits, employers are permitted to introduce new terms of employment, or entirely new contracts of employment provided that they either provide sufficient notice of the changes or provide fresh consideration for the agreement. In this case, the employer appears to have satisfied that criterion.

Justice Brown also found that with respect to the termination provision contained at paragraph 13 of the employment contract, there was no inconsistency between the termination clause and the ESA provisions which could give rise to any ambiguity in the plaintiff’s right to continue to receive benefits pursuant to the ESA. When considering the wording of the clause in issue and the intent of the parties demonstrated in the wording of the clause, indicating compliance with the requirements of the ESA, Her Honour could not conclude that the clause could or should be interpreted as contrary to or inconsistent with the provisions of the ESA. The court did not find anything which would suggest that the termination clause should be interpreted as contrary to the ESA. (Para 37.)

With respect to paragraphs 18 and 19 of the employment contract however, Justice Brown reached a different conclusion, providing the following reasons for decision:

[38] It is the position of the plaintiff that conduct that falls short of wilful misconduct cannot constitute dismissal for cause. The standard for just cause termination under the ESA entitles even those terminated with cause to minimal entitlements unless the employer can establish, pursuant to s. 2(1)(3) of Termination and Severance of Employment, O. Reg. 288/01, that the employee is guilty of wilful misconduct or wilful neglect of duty. While the defendants argue that the provisions enumerated above all bespeak wilful misconduct or wilful neglect of duty, I am unable to conclude that that is indeed the case, based on the wording thereof. I am, however, of the view that the provisions are overly broad and ambiguous. Sub-paragraph (a) does not represent a complete sentence, as a word or words are missing. One would have to guess as to what words are missing such that an employee would not be able to know, upon entering the contract, what conduct in that case might cause termination without notice or compensation in lieu thereof. I am further of the view that sub-paragraph (b) is equally broad, unspecific and ambiguous. I find equally that sub-paragraphs (c) and (d) fall into the same category of broad, unspecific and ambiguous wording.

[39] In light of my findings regarding clause 18, the clause is invalid and must be set aside.

[40] It is the position of the plaintiff that clause 19 defines confidential information and forbids its disclosure, with termination for cause being the penalty for the breach. However, the clause does not stipulate that any misconduct must be wilful and not trivial to support a termination without notice, as required by the ESA.

[41] As set forth in Wood v. Fred Deeley, a termination clause will rebut the presumption of reasonable notice only if its wording is clear, as employees are entitled to know at the beginning of an employment relationship what their employment will be at the end of their employment.

[42] Again, an employee is entitled to know at the beginning of an employment relationship what the employment will be at the end of their employment and how and when it may be terminated without cause. In this case, it is not clear in what circumstances the disclosure of confidential information may occur without immediate termination for cause without notice. One can conceive of a situation where confidential information may have been inadvertently disclosed in a situation where it is not wilful and/or where it is a trivial breach. This clause does not respect the ESA provisions in this regard.

[43] Based on my findings regarding clause 19, this clause is also invalid and must be set aside.

Given the court’s findings concerning paragraphs 18 and 19 of the employment contract, Justice Brown concluded that the whole of the employment contract, as it concerned termination must be voided, the result of which being that Ms Henderson was entitled to common law damages.


It is difficult to not have some empathy for both sides in this case.

With respect to the employer, Drs. Slavkin and Kellner had attempted to orient their affairs to allow them to properly prepare for retirement. They had properly introduced new employment contracts, which prescribed the amount of notice of termination to be provided and then, when they reached the point at which they realized they were going to be required to retire, they provided far more notice than the amount to which Ms Henderson had seemingly agreed.

Of course, one can also understand Ms Henderson’s position. After thirty some years of loyal service she suddenly finds herself unemployed through no fault of her own. Worse, and notwithstanding that notice had been provided six months earlier, the effective date of Ms Henderson’s employment occurred very early in the COVID 19 pandemic. One can understand why Ms Henderson may have been concerned about her economic future.

The court gets every aspect of this decision correct. Justice Brown was correct in her observation that, where an employment agreement is not consistent with the ESA, it becomes invalid irrespective of the actual arrangements made with an employee on termination, and the terminated employee becomes entitled to common-law damages. The Court of Appeal for Ontario’s seminal decision in Waksdale v. Swegon North America Inc., 2020 ONCA 391 makes patent such point.

Moreover, and again drawing on the Court of Appeal’s analysis in Waksdale, it does not matter where within the employment contract the offending language occurs. It does not matter whether the employer is attempting to rely on such offending language. If the language contravenes the ESA, then the whole of the termination provision must fall.

Takeaways for Employers

The takeaway for employers is to carefully review the whole of the contract for any reference to termination. It is not uncommon for employers to make reference to the right of termination in clauses other than those addressing termination itself. The comments about the right to terminate without notice contained within the employment agreement at issue were standard language.

Where offending language is found, employers would be prudent to take legal advice as to how to address such a situation before it finds its way into a litigation.

For a review of your written contracts of employment, why not see what it means to have “Experience. At Work.” and contact me?

Takeaways for Employees

Similar advice is provided to employees who find themselves suddenly unemployed. Even if the termination provision in your agreement appears to be solid, there may be other aspects of the agreement that may serve to invalidate such provision. Moreover, simply because you ostensibly agreed to something does not necessarily mean that you are bound to such agreement. Before accepting any severance offer it is prudent to solicit independent, experienced legal advice. If you have received a severance offer about which you have questions, contact me to see what it means to have “Experience. At Work.”

Contact Me

Sean Bawden is Experience. At Work.

I am an experienced employment lawyer and wrongful dismissal lawyer practicing with Kelly Santini LLP, which is based in Ottawa. I have appeared in courtrooms all across Ontario from Stratford, to L’Orignal, to Thunder Bay.

For 2.5 years I was in-house legal counsel providing employment law advice to one of Canada’s largest corporations and appeared in labour courts and tribunals literally the world over.

I am also a part-time professor at Algonquin College teaching Employment Law. I have previously also taught Trial Advocacy for Paralegals and Small Claims Court Practice.

I can be reached by email at or by phone at 613.238.6321 x233.

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As always, everyone’s situation is different. The above is not intended to be legal advice for any particular situation. It is always prudent to seek professional legal advice before making any decisions with respect to your own case.

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