Severability — Ontario Employment Law
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About Severability
A severability clause is a common boilerplate provision found near the end of most agreements. It states that if a court finds any specific part of the contract to be invalid or unenforceable, that specific piece should be "severed" (cut out), allowing the remainder of the agreement to stay legally binding. While these clauses are highly effective in commercial agreements between businesses, their application in Ontario employment law is vastly different.
In recent years, the Court of Appeal for Ontario has severely restricted the power of severability clauses in employment contracts, particularly when it comes to termination provisions. Employers historically used severability clauses as a safety net. If they drafted a termination clause that accidentally—or intentionally—offered less than the mandatory minimums under the Employment Standards Act, 2000 (ESA), they hoped a judge would simply sever the illegal portion and enforce the rest of the limit on the employee's severance.
Ontario courts have firmly rejected this approach. Because there is an inherent power imbalance between employers and workers, allowing employers to draft illegal clauses and rely on severability to "fix" them later would create no incentive to comply with the ESA in the first place. If a termination clause violates the ESA—for instance, by allowing the employer to withhold minimum termination pay for "just cause" without meeting the strict ESA standard for willful misconduct—the entire termination provision is rendered void. A severability clause cannot save it.
When a termination clause is struck down in its entirety, the "severance" does not stop at just the illegal sentence. Instead, the contract's attempt to limit the employee's entitlements is wiped out, and the worker becomes entitled to common law reasonable notice. Because parsing the exact phrasing of contractual clauses and assessing their compliance with statutory minimums involves complex legal interpretation, having a qualified professional evaluate the paperwork is crucial before accepting any severance offer.
Frequently Asked Questions
What exactly does a severability clause do?
A severability clause is designed to protect a contract from being thrown out entirely if one specific section is found to be illegal. It instructs a court to ignore the invalid portion and enforce the remaining valid sections of the agreement.
Can a severability clause save my employer's illegal termination clause?
Generally, no. Ontario courts have ruled that termination provisions must be read as a whole. If any part of the termination mechanism violates the Employment Standards Act, the entire provision fails, and a standard boilerplate severability clause cannot be used to rewrite or rescue it.
Why did my employer include a severability clause if it doesn't work?
Many employers use standardized contract templates or apply commercial contract principles to employment relationships. While a severability clause might fail to save an illegal termination provision, it could still be legally effective for other, unrelated parts of the employment agreement, such as confidentiality rules.
If my termination clause is voided, does my whole employment contract disappear?
No. The invalidity generally only strikes out the specific clauses attempting to limit your dismissal entitlements. The core employment relationship remains intact, and your termination rights default to common law reasonable notice instead of the voided contractual formula.
Can a severability clause fix an overly broad non-compete clause?
Courts are extremely reluctant to fix or "blue-pencil" restrictive covenants like non-competition clauses in employment contracts. If the geographic scope or time limit is deemed unreasonable, the court will typically strike the entire non-compete rather than using a severability clause to carve it down to a reasonable size.
When is the right time to have an employment lawyer review a severability clause?
You should seek an independent legal evaluation if you have been dismissed and your employer is pointing to your employment contract to limit your severance pay, as they may be relying on an unenforceable clause.
Common Scenarios
- A worker is dismissed without cause and their employer offers only a few weeks of pay based on the contract; however, a separate "for cause" section in that same contract violates the ESA rules, voiding the entire termination section despite a severability clause being present.
- A senior manager on a two-year fixed-term agreement is let go after eight months, and the employer tries to invoke a severability clause to cut out an illegal early-termination penalty while keeping a cap on the employee's payout.
- An employment contract excludes commissions from the calculation of termination pay, directly violating the ESA, and the employer argues that the severability clause should simply erase the word "commissions" rather than voiding the entire notice limit.
What You Should Know
- Never assume that a limitation in your employment contract is legally binding just because the document includes a severability clause at the end.
- Look out for broad "just cause" or "sole discretion" language in your contract's termination section, as these often violate the ESA and can nullify the employer's protections entirely, regardless of severability language.
- Retain copies of every version of your employment agreement, as courts will look at the exact wording of both the termination sections and the severability sections when resolving a dispute.
- Before signing a final release in exchange for a severance package, have an employment law practitioner examine the agreement to determine if the contractual limits are actually enforceable under current Ontario case law.
Featured Cases
Dufault v. Ignace (Township)
2024 ONCA 915 (CanLII) · 2024-12-19Dufault v. Ignace: Fixed-Term Termination Clauses
This appeal addressed the enforceability of termination clauses in a fixed-term employment contract under the Employment Standards Act. The Court of Appeal applied the Waksdale principle, holding that invalid 'for cause' provisions rendered all termination provisions unenforceable because they could not be severed. Consequently, the employee was awarded damages for the remainder of the fixed term.
Waksdale v. Swegon North America Inc.
2020 ONCA 391 (CanLII) · 2020-06-17Waksdale v. Swegon: Termination Clause Enforceability
This is a Court of Appeal decision addressing the enforceability of termination provisions in employment contracts that violate the Employment Standards Act, 2000. The court established that termination provisions must be interpreted as a whole and that severability clauses cannot save provisions that are illegal under the ESA.
Waksdale v. Swegon North America Inc.
2019 ONSC 5705 (CanLII) · 2019-10-03Waksdale v. Swegon: Termination Clause Severability
This is a summary judgment decision addressing the enforceability of termination clauses in an employment agreement. The court examined whether the invalidity of a 'Termination for Cause' clause rendered the entire termination provision void, or if a severability clause preserved the enforceability of the compliant 'Termination of Employment with Notice' clause. The court upheld the severability clause, finding the valid termination clause enforceable, and awarded costs to the successful defendant.
K. v. Procom Consultants Group Ltd.
2018 ONSC 7617 (CanLII) · 2018-12-21ESA Compliance: Void Termination Clause in Fixed-Term Contract
This case concerns the enforceability of termination provisions in a fixed-term employment contract under the Employment Standards Act, 2000. The court addressed whether a 'Termination for Cause' clause was void for non-compliance with ESA standards and whether this invalidity rendered the entire termination provision unenforceable. The court held that only the non-compliant clause was void while the remainder remained enforceable, and awarded the applicant only ESA minimum entitlements, which were nil due to the short duration of employment.
N. v. Metaswitch Networks Corporation
2017 ONCA 790 (CanLII) · 2017-10-16N. v. Metaswitch: Void Termination Clause & Severability
This is an appeal concerning the interpretation of a termination clause in an employment contract that excluded commissions from termination pay. The Court of Appeal for Ontario addressed whether a severability clause could save the termination provision from being void under section 5(1) of the Employment Standards Act, 2000. The court allowed the appeal, holding that the entire termination clause was void because it contracted out of an employment standard, and the severability clause was inoperative.
H. v. Thermal Energy International Inc.
2012 ONCA 635 (CanLII) · 2012-09-25Appeal Dismissed: 18 Months' Notice Upheld for Executive
This is an appeal to the Court of Appeal from a motion judge's decision granting partial summary judgment in a wrongful dismissal action between an employee and his former employer. The employee appealed the dismissal of his claims regarding a debenture, debts, and expenses, as well as a stay of execution on his damages. The motion judge had awarded the employee 18 months' notice but held that four sub-agreements settling various disputes were severable, meaning the employer's breach of the employment sub-agreement did not invalidate the others. The Court of Appeal dismissed the appeal, agreeing that the sub-agreements were independent and finding no error in staying the execution of the judgment pending the employer's counterclaim. The award of 18 months' notice stands.
M. v. ConCreate USL Limited Partnership
2012 ONSC 1840 (CanLII) · 2012-03-21Enforceability of Non-Compete Clauses in Employment
This case addresses the enforceability of restrictive covenants, including non-competition and non-solicitation clauses, within employment agreements. The court analyzed whether such covenants constitute unreasonable restraints of trade and applied the stricter scrutiny standard applicable to employment relationships compared to commercial transactions. Key issues included the reasonableness of scope, territoriality, and duration, as well as the application of the doctrine of severability to ambiguous or overly broad terms.
W. R. Grace & Co. of Canada Ltd. v. S. et al.
1980 CanLII 1568 (ON SC) · 1980-04-02Enforceability of Non-Competition and Non-Solicitation Clauses in Employment Contracts
A case involving the enforceability of non-competition and non-solicitation clauses in an employment contract. The non-competition clause was found unenforceable due to vague territorial scope, while the non-solicitation clause was upheld as protecting the employer’s proprietary interest in customers. The court applied principles from the Nordenfelt and Elsley cases and considered the balance between the employer’s interests and public policy.
F. v. Burns & Co. Ltd.
1964 CanLII 167 (ON SC) · 1964-03-16Employment Contract: Unreasonable Restraint of Trade Clause Severed
An employment contract dispute involving a restraint of trade clause in a retirement payment agreement. The court held that the provision allowing termination based on the employee's 'attitude and conduct' was an unreasonable restraint of trade and was severable from the rest of the agreement, leaving substantial consideration for the promise to pay.
George Weston Limited v. B.
1916 CanLII 581 (ON SCAD) · 1916-06-28Restrictive Covenant Unenforceable: Misrepresentation & Overbreadth
This case addresses the enforceability of a restrictive covenant in an employment agreement where the former employee was prohibited from competing within Toronto for one year. The Court of Appeal for Ontario held the covenant unenforceable due to misrepresentation by the employer, overbreadth regarding geographic scope and subject matter, and the inability to sever unreasonable portions.