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Termination clause

Termination clause and the importance of the word “minimum”

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.

 

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Wrongful dismissal update: More kinds of damages being ordered

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.

 

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Employment contract oversight proves costly

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.

 

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Three popular articles this week on HRinfodesk

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”.

 

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Termination provisions in employment contracts

As an employee, by law, you are entitled to reasonable notice of termination of your employment. Employers however, often attempt to limit your legal entitlements by explicitly defining your rights upon termination in the employment contract. In the recent case of Singh v Qualified Metal Fabricators Ltd. an Ontario Court adopted an employee–friendly interpretation of these termination provisions, resolving the potential ambiguities in favour of the employee. While employers are allowed to contractually limit employees’ common–law reasonable notice requirements, they are required to do so with complete precision.

 

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Three popular articles this week on HRinfodesk

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.

 

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Fresh consideration and employment contracts

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.

 

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Termination clauses: Importance of clear language

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.

 

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Ontario judge strikes down yet another termination clause

Some employment contracts have termination clauses which state that an employee will receive notice of termination “in accordance with the Employment Standards Act” or words to that effect. The purpose of this clause is to take away the employee’s right to common law “reasonable” notice of termination. In 2000 an Ontario Superior Court judge concluded that this kind of language meant that an employer was only required to provide the employee with the minimum notice of termination stipulated in the ESA. Advantage employers.

 

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Ontario Court of Appeal suggest deference to trial judge in interpretation of termination clause

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.

 

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Three popular articles this week on HRinfodesk

The three popular articles this week on HRinfodesk deal with: A case where an employee was awarded $25,000 in damages because the employment contract contained a termination clause that could not be enforced; a case that addresses whether an employer, in a safety sensitive workplace, can require an employee to undergo a post-incident breathalyzer alcohol test and a urine drug test after a workplace incident; and a CRA document that addresses, where a payment received for work-related travel expenses exceeds the costs incurred, is the excess amount included in income under the Income Tax Act?

 

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Employment contract law changed in 2015. Have you reviewed yours?

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.

 

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Three popular articles this week on HRinfodesk

Three popular articles this week on HRinfodesk deal with presenteeism; fixed-term contract; and, changes to accessibility regulations.

 

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Ontario divisional court addresses enforceability of termination clause in federal jurisdiction

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.

 

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Danger ahead: Beware of changes to employment agreements

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…

 

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