Employer Liable for Remainder of Fixed Term Employment Contract
A new decision from the Ontario Court of Appeal shows the potential downside of fixed term employment contracts for employers and the importance of proper drafting.
A new decision from the Ontario Court of Appeal shows the potential downside of fixed term employment contracts for employers and the importance of proper drafting.
There is no shortage of cases which confirm the perils of assuming that an employer’s liability for reasonable notice of termination will be capped at one month per year of employment.
There continues to be a seemingly never-ending stream of cases which confirm the perils of assuming that an employer’s liability for reasonable notice of termination will be capped at one month per year of employment.
Employee salaries and benefits can be some of the greatest costs borne by a business. As a result, when a company faces financial hardship, they will often terminate positions to reduce their costs.
In the absence of an employment agreement that expressly sets out a notice period upon termination, employees who are terminated without just cause are entitled to a notice period or pay in lieu of notice from their employers in accordance with the common law.
The distinction between an employee and independent contractor is not always clear as can be seen in the recent decision of Tetra Consulting v Continental Bank et al., 2015 ONSC 4610.
The dismissal of a long-term employee who is entitled to common law reasonable notice can result in significant liability for an employer. As the determination of the appropriate notice period is contextual, it can be difficult for an employer to accurately assess their potential liability.
We have written a number of times regarding cases that significantly depart from the so-called one month per year of service rule of thumb. Yet another case has illustrated the risk an employer runs in assuming their liability will be capped at one month per year of service.
In Ostrow v. Abacus Management Corp. Mergers and Acquisitions, 2014 BCSC 938 (May 29, 2014), the British Columbia Court Supreme Court assessed the appropriate notice period for a nine-month employee.
A recent post cautioned employers to beware of using the one month per year of service “rule of thumb”. The Ontario Superior Court of Justice has once again affirmed that, depending on the circumstances, courts are willing to award short service employees significantly more than one month per year of service.