There is a presumption that an employee is entitled to common law reasonable notice upon termination of employment without cause. Employers may rebut this presumption through an enforceable termination clause that, at the very least, provides Employment Standards Act, 2000 (“ESA”) minimums, and displaces an employee’s right to common law reasonable notice.

In the past year, the Ontario Court of Appeal made it clear that it will find as unenforceable a termination clause where even the slightest imprecision could result in an unlawful contract. This trend started in Andros v. Colliers Macaulay Nicolls Inc., where the Court narrowly interpreted a failsafe clause as applying only to the first part of a termination clause but not the second. In Rossman v. Canadian Solar Inc., the same Court concluded that savings provisions, such as a failsafe provision, cannot save employers who attempt to contract out of the minimum standards prescribed by employment standards legislation. And most recently, in Waksdale v. Swegon North America Inc., the Court struck down a valid “without cause” termination sub-clause because the “for cause” termination sub-clause was unenforceable. In short, the Court concluded that where one of the sub-clauses is unenforceable, the entire termination clause must fall and it will not be saved by a severability clause.


Continue Reading Another Termination Clause Bites the Dust

Employers often wish to enter new or updated employment agreements with existing employees. The driving force is typically that circumstances have changed, but it can also be that the employer simply wants different or additional terms. However, the employer must give the employee valid consideration, otherwise the new or updated agreement will not be enforceable.
Continue Reading A New Contract for a Current Employee? Consider the Consideration!

The Ontario Court of Appeal has reiterated that, barring exceptional circumstances, reasonable notice for dismissal without cause will not exceed 24 months. The Court partially overturned the lower court’s decision in Dawe v The Equitable Life Insurance Company of Canada, which also ruled on the enforceability of unilateral changes to the employer’s bonus plan.
Continue Reading 24 Months Reaffirmed as the “High End” of Reasonable Notice; Bonus Plan Changes Must Be Accepted by Employee

This is the first of our two-part series on recent Ontario Superior Court of Justice decisions that employers need to be aware of before finalizing their next employment agreement. The decisions highlight the risk of failing to include an enforceable termination provision in the employment agreement. Absent such a provision, an employee dismissed without cause will be entitled to “reasonable notice” of termination at common law.

In this first part, we examine two recent decisions of the Court that suggest that the Court now favours longer notice periods for long service employees of advanced age: Dawe v Equitable Life Insurance Company, 2018 ONSC 3130 (Dawe) and Saikaly v Akman Construction Ltd., 2019 ONSC 799 (Saikaly). Until recently, 24 months was generally considered as the upper limit of notice entitlement that courts would award absent exceptional circumstances.
Continue Reading Dismissing a Long Service Employee of Advanced Age May Prove to be More Costly

A recent decision of the Alberta Court of Appeal adds further confusion to the issue of the enforceability of termination clauses. In Holm v AGAT Laboratories Ltd, 2018 ABCA 23 (“Holm“), the Alberta Court of Appeal (“Court”) held that explicit language must be included in a termination clause to oust an employee’s common law rights.
Continue Reading Alberta and Ontario Courts Diverge on Termination Clauses

The Ontario Court of Appeal just released another decision on the interpretation and enforceability of termination clauses – the latest chapter in a less-than-clear set of guidelines. Generally speaking, a properly drafted termination clause can be used to limit an employee’s entitlements on dismissal.
Continue Reading Ontario Court of Appeal Weighs in (Again) on Termination Clauses

The Ontario Court of Appeal recently confirmed not only that dependent contractors are entitled to reasonable notice of termination, but that 26 months can be an appropriate notice period for long-service dependent contractors.
Continue Reading Dependent Contractors are Entitled to Reasonable Notice (and Potentially Lots of It)

Keenan v Canac Kitchens, 2015 ONSC 1055 (“Canac Kitchens“) serves as an important reminder that simply using the term “independent contractor” in an agreement is not enough to protect an employer from its obligation to provide, among other things, reasonable notice upon termination.  The nature of a working relationship is generally defined by the actual nature of the relationship, including how the parties conduct themselves, not by the terminology used by the parties to describe their relationship.
Continue Reading If it Walks Like a Duck and Talks Like a Duck…It’s a Dependent Contractor and is Entitled to 26 Months Notice?

One of the questions we are commonly asked by non-unionized employers is whether they should use written employment agreements with their employees. While written employment agreements are not a replacement for sound human resources planning or judgment, a well-written agreement, tailored to the specifics of the employment relationship, can be an invaluable component of successfully managing employees throughout the life-cycle of the employment relationship, beginning to end.
Continue Reading Early New Year’s Resolutions: Are You Using Written Employment Agreements With Your Canadian Employees?