Both the basic blue pencil clauses and the more robust clauses of the reasonableness rule are used to ensure that the agreement survives if a party is found to be unenforceable. But sometimes the parties will not want their agreement to survive the removal or modification of a substantial part of the agreement. A recent Ontario Superior Court case highlights the importance of one of these clauses; Separation clause. The term of tenability clauses are provisions contained in the contracts which stipulate that if part of the contract is deemed illegal or otherwise unenforceable, the rest of the contract should continue to apply. If the modification or removal of part of the agreement nullifies the essential purpose of the agreement for one or both parties, the parties should contain a useful language that leaves the entire agreement to die, a substantial part should be removed or substantially modified. North makes it clear that employers are no longer allowed to invoke separation clauses to remedy defects that do not meet employment standards. Given the inability to rely on a savings rule, it is essential that employers ensure that their redundancy clauses ensure that workers receive no less than their minimum ESA rights at any time. The Ontario Court of Appeal ruled that an employer could not invoke a dissociation clause in an employment contract to delineate the invalid portion of a termination clause and allow the remaining portion of the termination clause to remain in effect. The application of this term to the facts in this case was found invalid, not just the phrase „basic wage.“ The Court ruled in favour of the employer and concluded that clause 2, poorly written, is clearly a separate and distinct clause and that it is not possible to invoke the annulment of all the termination provisions.
Despite the absence of a deterrence clause, the court refused to cancel the entire contract because of an offensive aspect. The case shows once again that the development of an employment contract must be carefully followed. Employers should exercise caution and seek advice from experienced employment lawyers when developing an employment contract for their employees. In Oudin v The Francophone Centre in Toronto, after about 13 years as project manager for the magazine, Francois Oudin`s position was eliminated for economic reasons. His employment was terminated and his ESA severance and severance pay was made available to him in accordance with the terms of his employment contract. Any illegal clause in an employment contract is automatically cancelled. In California, for example, the non-compete bans on his face are overturned because the state has made them illegal by law. Any other clause that requires an employee to accept what is made illegal by national or federal law is also struck down. For example, a clause inviting an unpaid employee to work unpaid overtime is invalid. There is no doubt that it is the strange employment contracts that receive the most attention. The employment contract, well developed and efficient, passes quietly at night, while the poorly constructed conditions, often unenforceable, are in the spotlight. In defending the worker`s right, the employer argued that if the sanction contained in the redundancy clause, which limits redundancy rights to basic treatment, ESA, the dissociation clause should work to remove that penalty from the contract.
Thus, the remainder of the termination clause would remain intact and in effect. The Court of Appeal set aside the appeal judge`s decision. On the contrary, the Court of Appeal held that a dissociation clause could not be used to consume part of the termination clause.