Sometimes, the law works in a way that can make an employment lawyer’s job seem like magic. An ironclad employment agreement can suddenly disappear when the correct language is identified as being in it. Or a series of fixed term contracts, each of which entitles the employee to a nominal amount on dismissal? These can sometimes be negated by showing that the employee was actually on an indefinite term contract under the guise of fixed term ones. Then, the employee is entitled to reasonable notice of their dismissal.
However, this is not always the case. Sometimes the Court reminds us that not every employment relationship is for an indefinite term, and a fixed term contract may just be a fixed term contract. In Steele v. The Corporation of the City of Barrie, Justice McCarthy did just that.
The facts
The City of Barrie initially hired Mr. Steele in 2014 for a two year fixed term. His employment was extended four times, ending with one final extension from October 5, 2017 to December 31, 2017. At the end of the final term Mr. Steele sent an email to his manager expressing his gratitude and best wishes, and attended a farewell lunch held in his honour.
Mr. Steele subsequently sued, claiming that his employment was permanent and was terminated without cause or reasonable notice. Mr. Steele suggested that there was ambiguity in the language of the extensions. He also claimed that his employer’s conduct and representations led him to believe that his employment was indefinite and therefore permanent.
Analysis
The Court reviewed the initial contract and each extension, noting that these were poorly drafted but unambiguous about the nature of the relationship. Instead, the Court found that Mr. Steele was employed for a series of fixed terms, with the end of each delineated. Also, his employment was treated as a series of fixed terms by his colleagues and managers at the City of Barrie. The Court found that based on this, Mr. Steele could not have reasonably formed the impression that his employment was indefinite.
The Court also reviewed Mr. Steele’s conduct throughout and at the end of his employment and found that this suggested he viewed his employment as a series of fixed term contracts. Mr. Steele admitted at trial that he celebrated each extension as it was granted. The Court also noted that at the conclusion of his final term, he did not contact the City to request an explanation, seek severance pay or secure a letter of termination.
Justice McCarthy reviewed other cases where a series of fixed terms contracts established an indefinite-term relationship to which common law and statutory protections would apply, including Ceccol v. Ontario Gymnastics Federation (2001). In Ceccol, the plaintiff had been employed by the defendant for sixteen years under a series of fifteen one year agreements. The contracts each suggested that the renewals would be automatic if the plaintiff earned acceptable performance reviews. Further, the parties’ conduct throughout the term indicated that the plaintiff was an indefinite term employee. The Court of Appeal found this conduct, combined with the ambiguous wording of the contracts to be compelling evidence that the plaintiff was hired and treated as a fixed term employee.
The Court distinguished Ceccol from Steele. There was no ambiguity in the employment contract or the extension notices and no conduct between the parties which could have objectively signaled any other arrangement but a fixed-term of employment. Finally, the Court noted there was a substantial difference between the fifteen one year contracts over sixteen years in Ceccol and the terms of Mr. Steele’s employment. The Court found for the defendant.
Conclusion
The Court’s holding in Ceccol seemed to indicate to the employment law world that a series of fixed term contracts were really a single indefinite contract. This meant that an employee in one of these arrangements whose employment was “severed” by not having their contract renewed would be entitled to reasonable notice.
Steele confirms that there is more to the analysis than confirming the existence of a series of contracts. Instead, the parties must consider the nature of each fixed term contract and the parties conduct throughout. For the rule in Ceccol to apply there must be ambiguity in the contract’s language and the parties’ conduct to create the understanding that an indefinite term contract of employment existed.
This case also stands as an example of the benefit to using clearly drafted, properly implemented contracts in all aspects of the employment relationship. If the City of Barrie had not had these in place, it may have been on the hook to Mr. Steele for multiple months of reasonable notice. Instead, he will walk away with nothing, combined with the prospect of paying some of the legal fees of their former employer.
By Geoffrey Lowe for Rudner Law
- Proving failure to mitigate is difficult - April 5, 2024
- You’re fired: Welcome back! - March 1, 2024
- The risk of constructive dismissal even in layoffs respecting the ESA - February 9, 2024