Just like pre-nuptial agreements, employers should contemplate termination when their employment contracts are drafted. A recent case illustrates why it is important to include a legally enforceable termination clause in an employment contract for all employees.
One of the questions at the forefront of many employers’ minds when they are considering terminating an employee without cause is how much it is going to cost. Unless there is a written employment contract with an express termination clause, an employer’s obligation is to provide reasonable notice of termination. Since there is no set formula for determining the appropriate length of the reasonable notice period, employers (or their legal counsel) must estimate what they think the notice period could be, having regard to the employee’s age, length of service, character of employment, the availability of similar employment, and the employee’s skills and training. Often, employers and their legal counsel will use a rough rule of thumb of one month notice per year of service (although the courts have denied that such a rule of thumb exists).
When a company purchases another business, it is important to consider the legal implications respecting the status of employees. The Ontario Superior Court recently decided a case regarding the validity of an employment contract where an employee had signed an agreement with his former employer but never executed a new agreement when the company was purchased by another business. The plaintiff argued that the employment contract only governed the previous employment relationship. The Court disagreed, finding that the terms of the employment contract still applied.
The three most viewed articles on HRinfodesk this week deal with the drafting of termination clauses to exclude benefits, a collision involving two employees in the employer parking lot entitling them to WSIB benefits and the right of employers to hire employees with certain language skills.
We know that there is no precise method to determine the common-law period of reasonable notice when terminating employees. What has evolved and has been the most quoted case to help with this is the infamous Bardal vs. Globe and Mail. This case tells us that reasonable notice must be decided with reference to each specific case, considering the character of employment, length of service of the servant, the age of the servant and the availability of similar employment, having regard to the experience, training and qualifications of the servant.
Despite being one of the most basic and fundamental legal protections employers can have, many employers do not use written employment agreements when they hire new employees.
I recently attended the Law Society’s annual Employment Law Summit, which is always filled with top-notch employment lawyers providing valuable insight and practical advice on issues relating to employment law and human resources. Many of the discussions touched upon issues relating to the use of employment agreements, including termination clauses. The comments caused me to consider my own experiences in dealing with…