Employees are entitled to reasonable notice upon termination of their employment. However, a termination clause contained in an employment contract may oust the employer’s obligation to provide reasonable notice, so long as the termination clause actually limits the employee’s entitlement to notice, without violating employment standards.
Once upon a time, employees did not sign employment contracts with termination clauses and employment lawyers fought over the appropriate “reasonable” notice period. In 2017, however, employees now claim in addition to wrongful dismissal damages, human rights damages, moral or Wallace damages, punitive damages, and damages for the intentional infliction of mental stress.
As an employment lawyer, my consistent advice to employers is, whether you have one employee or one hundred employees, every employer needs to have written employment contracts. There are a number of ways that employment contracts can avoid or reduce liability, but the single most valuable term to include is a termination clause. In a written employment contract, employers have the opportunity to limit what can otherwise be a significant liability to their employees for termination pay, also referred to as severance or reasonable notice of termination.
The three popular articles this week on HRinfodesk deal with: A case that addresses the validity of a termination of employment provision; Consumer Price Index (December 2016); and the release of revised noise guideline “A Guide to the Noise Regulation (O. Reg. 381/15) under the Occupational Health and Safety Act”.
The three popular articles this week on HRinfodesk deal with: A matter where the court had to determine the enforceability of a promoted employee’s new employment contract, particularly the termination clause; current and 2017 payroll rates; and PRPP legislation that is now in force in Ontario.
When a company promotes an employee, the employer should provide the employee with a new contract to sign prior to allowing the employee to commence his or her duties. In that way, the company is providing the employee with “fresh consideration” to make the contract enforceable. Consideration is the legal word for the exchange of something of value to make contracts enforceable and in a promotion it takes the form of the increased salary that comes with the new job. If the company allows the employee to be promoted and then has the employee sign an employment contract after the promotion has already taken place, there is a chance the employee can argue the terms of the contract that were not discussed pre–promotion should not be enforced for lack of fresh consideration rendering the terms of the contract unenforceable.
In recent years, there have been many decisions on the enforceability and interpretation of termination clauses in employment contracts—which employers and their legal counsel read with both interest and apprehension. The Nova Scotia Supreme Court has now weighed in on the debate.
The Ontario Court of Appeal weighed in, to some extent, on the hot issue of enforceability of termination clauses in a recent decision. In this case, the clause at issue was written in French. The Applicant argued that the Motion Judge’s interpretation of the clause only referred to “notice” and not “severance” and therefore the termination clause was an unlawful attempt to contract out of the Employment Standards Act because it did not expressly provide for the payment of severance and there are a number of cases suggesting such clauses are void.
Recent court decisions changed how the law applies to employment contracts, most importantly terminations, but also off-duty conduct, consideration and restrictive covenants. Important lessons from the changes are that employers need to review their employment contracts, you can update them or change their terms while complying with the law, and failing to do so can damage your organization’s finances and reputation.
Three popular articles this week on HRinfodesk deal with presenteeism; fixed-term contract; and, changes to accessibility regulations.
In the past three years there have been a number of cases arising from the Ontario courts considering whether or not termination clauses which purport to rebut the implied presumption of common law notice and limit an employee’s entitlements upon termination are enforceable. The enforceability of such clauses can have significant consequences on the quantum of an individual’s damages because an employee’s common law entitlements typically exceed his/her minimum entitlements under the applicable minimum standards legislation. The Ontario Division Court recently considered the enforceability of a termination clause in the federal sector in Luney v. Day Ross Inc., 2015 ONSC 1440.
To appreciate the dangers of varying employment terms, we must start with the foundations of contract law. First, a contract requires that each party receive a benefit (consideration). Second, if the parties agree to a variation of contract, but consideration is not received by both parties, Courts will consider the new contract an “unenforceable unilateral variation”. Third…