The Ontario Superior Court of Justice decision in M. v. Zim, 2024 ONSC 5540, is a helpful reminder for employees: long service matters and unclear termination clauses often won’t limit your rights.
In this case, an employee with 21 years of service was terminated without cause. The employer relied on a termination clause that it said limited the employee to only minimum entitlements under the Ontario Employment Standards Act, 2000 (ESA). The court disagreed, found the clause unenforceable, and awarded 21 months of common law reasonable notice.
Key Facts
- The employee started work in May 2002 after immigrating to Canada.
- Over 21 years, she held various roles and ultimately worked in a specialized pricing role in the ocean freight industry.
- She was terminated without cause on March 15, 2023, shortly before turning 59.
- The employer relied on an employment agreement signed in 2002, including a termination clause that referenced compliance with “applicable legislation.”
Why the Termination Clause Failed
The termination clause stated the employer could terminate employment “at any time” by providing notice and/or severance pay “as may be required under the applicable legislation.”
The court found this wording too vague and not clear enough to remove the employee’s right to common law reasonable notice.
Key point: If a contract is going to limit an employee to ESA minimums, it must be clear and unambiguous. If it is not, the court may treat the clause as unenforceable. See: Termination clauses in Ontario
The Result: 21 Months of Reasonable Notice
Because the termination clause failed, the court applied the common law reasonable notice analysis (often called the Bardal factors), including:
- Length of service: 21 years (a major factor)
- Age: close to 59, which can make re-employment more difficult
- Type of role: specialized work in a niche industry
- Availability of similar work: limited comparable opportunities
The court awarded 21 months of reasonable notice. More on how notice is calculated: What is an appropriate notice period?
What the Employee Was Entitled To Be Paid
The court confirmed that reasonable notice is meant to compensate the employee for everything they would have received if they had remained employed during the notice period, not just base salary. This included:
- Base salary
- Bonuses (including an unpaid $13,000 bonus from the prior year)
- Benefits and pension contributions
- Car allowance
Notably, the court also ordered the employer to continue health benefits coverage for the full notice period.
Key Takeaways for Employees
- Long service can mean significant notice. For employees with 20+ years of service, common law notice awards often fall in the 18–24 month range, depending on the circumstances.
- A termination clause doesn’t automatically override your rights. If the clause is unclear or incomplete, a court may treat it as unenforceable.
- Older contracts can be especially risky. Many agreements signed years ago do not meet today’s legal requirements for enforceable termination provisions.
If you have been terminated without cause in Ontario — especially after long service — this case is a reminder that you may be entitled to significantly more than what is offered at the outset. Termination clauses are often relied on to limit compensation, but if the wording is unclear or unenforceable, you may have a claim for common law reasonable notice. Contact Monkhouse Law for a free 30-minute consultation to review your employment contract and termination package.