EMPLOYMENT CONTRACTS

STACEY REGINALD BALL

82 SCOLLARD STREET TORONTO, ON, M5R 1G2

Call: (416) 921 7997 Ext.225     Email: srball@82scollard.com

Many are not aware that the employment relationship between an employer and employee is a type of contract.

TERMINATION PROVISIONS

Reasonable Notice

 

Employment contracts in Canada and Ontario are often much more complicated than most contracts, since special employment law imposed rules are grafted upon them. See Slater v. Sandwell(1994), 5 C.C.E.L. (2d) 308 (Ont. Ct. (Gen.Div.) and Machinger v. HOJ(1992), 91 D.L.R. (4th) 491 (S.C.C.). An employment contract exists between an employee and employer, even if it has never been placed into writing. Employment contracts are important because they let the parties determine specific terms and conditions that will govern the employment relationship. Due to the special nature of employment contracts, not all terms of the contract are enforceable by operation of law. Often employment agreements contain clauses that are not binding on the employee or the employer. Examples include improperly drafted termination provisions and other unfair or “unconscionable” terms.

Reasonable notice is a very important concept in employment law. As explained in the article titled “Wrongful Dismissal and Just Cause”, an employer can terminate a non-unionized employee for almost any reason that is not discriminatory or reprisal against the employee. However, an employee who is terminated for “just cause”, meaning they are guilty of wilful misconduct, disobedience or neglect, is not entitled to notice of termination or pay in lieu of notice under the Employment Standards Act. If an employee is terminated without cause, the employer must provide the employee with the appropriate notice of termination, or pay in lieu of notice of termination. At the very least, the employee is entitled to the minimums contained in the Employment Standards Act. However, the employee can seek common law reasonable notice, which usually works out to a higher amount.

​Employment Standards Act

 

In an effort to limit paying more termination pay, employment contracts often include a termination provision, which will limit the amount of termination or severance pay that the employee is able to receive. If done properly, the termination provision can displace the presumption of common law reasonable notice that an employee would otherwise receive. However, a termination provision must be unequivocal, explicit and found to be a valid term of the employment agreement for this to occur. Technical violations of employment standards legislation like the Employment Standards Act can render harsh termination provisions void. The result of this can be very dramatic. Contracts which purport to limit statutory severance to a few weeks can be declared illegal, with common law reasonable notice of several months being substituted by the court.

Recent cases in this regard include decisions such as: Miller v A.B.M. Canada Inc. 2014 ONSC 4062; Wright v. Young & Rubicam Group of Companies, 2011 ONSC 4720 and Stevens v Sifton Properties Ltd., 2012 ONSC 5508. In order to be valid, termination provisions must acknowledge the minimum notice periods that are set out in the Employment Standards Act, among other requirements. General contract law principles such as unconscionability, undue influence and duress also apply to employment contracts and termination provisions. Please note that the above information does not constitute legal advice. It is general information about the law. If you require legal advice and assistance in an employment matter, please contact the experts at Stacey Ball – Employment Lawyer in Toronto.

TERMINATION PAY

LEARNING CENTER

Dependent Contractor v. Employees

August 27, 2019

What is a Dependent Contractor? A workers relationship generally falls into one of three classifications: employee, dependent...

Learn More

Independent Contractor v. Employee

September 3, 2019

What’s the Difference? Businesses use a variety of different workers for varying purposes. Employees may be hired...

Learn More

No Interruption in Employee’s Length of Service Despite “New” Corporate Structures

January 15, 2020

The Ontario Court of Appeal released its decision and confirmed that courts will overlook the differing corporate...

Learn More

Termination Lawyer Toronto

September 2, 2020

What is Termination of Employment? If an employer stops employing or discharges an employee from his duties...

Learn More

CONSULTATIONS

ASSOCIATIONS