Employers should pause before entering into fixed\u002Dterm agreements. Find out more.
The Ontario Court of Appeal summed it up in the Ceccol decision.
“It seems … that a court should be particularly vigilant when an employee works for several years under a series of allegedly fixed-term contracts,” the court ruled.
It is not always the case that definite-term contracts renewed several times cannot be terminated at their end. In the recent decision of Steele v. City of Barrie, Steele was hired on a two-year fixed-term contract, extended on four separate occasions. When the employer decided not to extend it further, the employee sued for wrongful dismissal. In that case, the court found that the parties unambiguously intended a definite-term agreement ending at the expiry.
Many think that they can avoid all of these problems by including a right to terminate a fixed-term contract on an earlier basis. But as you have read in many of these columns, most early termination clauses are unenforceable and the Supreme Court of Canada in Matthews v. Ocean Nutrition, a case in which I represented Mr.
Compare that to a typical wrongful dismissal action when the employee is not on a term agreement. Let us say that employee is held entitled to 18 months’ pay. If the employee finds comparable work at the same income in, say, seven months, the employer will be on the hook only for those 7 months. Almost no employee is awarded by the court more than 24 months in the absence of a contract but those 24 months are merely titular if the employee finds other work within it.
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