Published on: July 2, 2025
What You Sign Might Limit What You Deserve
Most people don’t give their employment contract a second look—until they’re handed a termination letter.
You may assume that if you’re let go, your employer will follow “the law.” But here’s what they don’t tell you: sometimes, the contract you signed months or even years ago quietly limits what you’re owed. All because of a few lines buried under Termination of Employment.
That clause? It could be the difference between a few weeks of pay and several months’ worth of compensation.
But here’s the good news: just because it’s in your contract doesn’t mean it holds up in court. In Ontario, courts regularly strike down termination clauses that don’t meet legal standards—opening the door to common-law entitlements far beyond the basic minimums.
So before you assume you’re stuck with what’s written, let’s break it down.
Read More:
They Pressured Me to Sign a Termination Letter in 48 Hours — Is That Legal?
I Didn’t Sign My Severance Offer—What Happens Next?
What Exactly Is a Termination Clause?
A termination clause is a part of your employment contract that sets out what happens if your job ends—how much notice (or pay instead of notice) you’ll get, and under what terms.
Think of it like this: while Ontario’s common law might say you’re owed months of severance based on your position, age, and years of service, a termination clause can try to cap that amount—sometimes down to just the bare minimum under the Employment Standards Act (ESA).
Here’s the thing: employers often include these clauses to limit your entitlements. And many employees don’t realize how much they’re giving up when they sign.
There are generally two types of clauses:
• With cause: This says what happens if you’re fired for misconduct.
• Without cause: This outlines notice or pay you’ll get if you’re let go for business reasons, restructuring, or no reason at all.
Not all clauses are enforceable, though. And that’s where it gets interesting.
Why These Clauses Often Don’t Hold Up in Court
Here’s the truth most employees don’t know: just because a termination clause exists in your contract doesn’t mean it’s enforceable.
Courts in Ontario regularly strike down these clauses. Why? Because many of them:
• Conflict with the minimum standards set by the Employment Standards Act (ESA)
• Use vague or confusing language
• Try to limit severance too aggressively
For example, if a clause says you’ll get “no notice” if you’re fired for any kind of misconduct—even minor errors—that could violate the ESA. And if it violates the ESA in one part? The whole clause might be tossed out.
Once that happens, you’re no longer stuck with just the ESA minimum. You may be entitled to common law notice, which can mean several months’ pay—sometimes even up to 24 months, depending on your situation.
The bottom line? Courts prioritise fairness. If a clause feels off, it probably is—and a lawyer can help you spot the cracks before you sign or after you’ve been let go.
Why Common Law Rights Matter More Than You Think
Let’s say your contract gets thrown out—now what?
In Ontario, once a termination clause is found unenforceable, you fall back on your common law rights. And that’s where things can change dramatically in your favour.
Under common law, you’re often entitled to “reasonable notice”—which can be significantly more than the ESA minimum. While the ESA might offer you 1–8 weeks of notice, common law could entitle you to several months of compensation, depending on things like:
• Your age
• Your position and responsibilities
• Your length of service
• How easy (or hard) it will be for you to find a similar job
For example, someone in their 50s who worked in a senior role for 10 years might get 12–18 months’ worth of severance under common law, not just a few weeks.
This is why employers often want you to accept that contract clause upfront—because it limits what they owe you later. Knowing this can help you avoid signing away thousands of dollars without even realising it.
What You Can Do to Protect Yourself
Most people don’t think twice before signing an employment contract. You’re excited. You want the job. The legal stuff? It feels like fine print.
But that fine print can cost you—sometimes tens of thousands—if your job ever ends unexpectedly.
Here’s how to stay one step ahead:
• Don’t sign in a hurry. If a job offer includes a termination clause, take your time. You’re allowed to ask for a day or two to review it.
• Have it reviewed. A quick review by an employment lawyer can flag problematic clauses—especially those that try to contract out of common law entitlements.
• Negotiate if needed. Some employers are open to revisions. If they want you for the role, they might agree to tweak or remove an overly restrictive clause.
• If you’ve already signed—don’t panic. Courts in Ontario often strike down vague, harsh, or ESA-breaching clauses. You may still be entitled to full common law notice, even if your contract says otherwise.
• If you’ve been terminated, don’t assume the severance offered is final. Many “final offers” are just starting points. Get a second opinion before accepting anything.
Remember: contracts are written by employers to protect employers. You deserve someone in your corner to balance the table.
Don’t Let Fine Print Define Your Future
Termination clauses are more than just legal jargon. They can shape your financial future. And if you’ve been let go, you don’t have to settle for what’s written in black and white.
At Taman Singh Law, we’ve helped countless employees challenge unfair clauses and walk away with the compensation they truly deserved.
Unsure what your contract really says about your rights?
Book a free consultation. We’ll review your agreement, explain your options clearly, and stand by you every step of the way.
No stress. No pressure. Just straight answers—and strong legal support.
???? Email: taman@rzcdlaw.com
???? 647-360-1141
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About The Author
Taman Singh is an employment lawyer with a focused practice in wrongful dismissals and severance negotiations. He is dedicated to advocating for employees and ensuring they receive the compensation they are rightfully owed. With a sharp understanding of Ontario employment law and a results-driven approach, Taman consistently helps clients navigate complex workplace disputes and maximize their severance packages.
