Welcome to “Cases That Should Have Gone to the Supreme Court of Canada, But Didn’t!”
In this episode, Kyla Lee from Acumen Law Corporation discusses a case about employment law and severance pay—highlighting the growing need for national consistency in how Canadian courts enforce (or reject) termination clauses that fall short of statutory minimums.
Key Points Discussed
The Legal Context
A woman in Ontario was terminated by her employer without cause, making her entitled to severance pay. Under her employment contract, she received an amount lower than what she would have been guaranteed by Ontario’s Employment Standards Act (ESA). She challenged the contract, arguing that the severance clause was unenforceable because it conflicted with the minimum standards guaranteed by the ESA.
The court agreed. It found the contract’s termination clause invalid and unenforceable, ultimately awarding her more than $150,000 in severance—well above what she would have received under the employer’s original agreement.
Why This Case Matters
Contract Clauses vs. Statutory Rights
This case raises serious concerns about the widespread use of termination clauses in employment contracts that attempt to contract out of workers’ statutory entitlements. While the Ontario Court of Appeal protected the employee’s rights in this case, courts in other provinces are not bound by that ruling. As employment law is determined provincially, the same clause might be upheld elsewhere in Canada.
Power Imbalances in Employment
Employees often sign contracts without fully understanding their legal rights or the implications of restrictive severance clauses. This case illustrates how employers can use that imbalance of power to limit payouts, and how judicial oversight is necessary to uphold fairness—particularly at the end of a person’s employment.
Missed Opportunity for Legal Clarity
The Supreme Court of Canada declined to hear the case, missing a critical chance to:
-Set a national precedent on the enforceability of severance clauses that undercut employment standards
-Create consistency across jurisdictions to prevent uneven outcomes for workers
-Address the broader issue of employer-employee power imbalances at both the hiring and termination stages
Instead, the Court left it to provincial courts to decide on a case-by-case basis—leaving the door open for uncertainty, future exploitation, and inconsistent outcomes.
Topics Covered
-Severance pay and employment standards
-Contractual clauses versus statutory minimums
-Power imbalances in employment law
-The need for Supreme Court guidance on national employment law consistency
