Failure to repeat termination clause after multiple promotions voids clause

June 28, 2019 Barry B. Fisher LL.B. Employee Relations, Employment/Labour Standards, Human Resources, Notice, Damages and Settlements, Payroll, 0

In McKercher v Stantec Architecture (2019 SKQB 100), Justice Elson had a situation where at the time of his hiring as a staff architect, the plaintiff signed an enforceable contract limiting his notice to a maximum of 3 months.

When he was terminated 11 years later, he had been promoted a number of times and ultimately held the position of Business Centre Sector Leader, reporting to a VP.

Applying the change in substratum argument, the judge had this to say :

Further, and as informed by the longstanding authority in Bardal v Globe & Mail Ltd. (1960), 24 DLR (2d) 140 (Ont H Ct) [Bardal], the period of reasonable notice increases with, inter alia, the length of service and the level of responsibility. In my view, it necessarily follows that where an employer wishes to rely on a comparatively short notice limit in the original employment contract, it must take reasonably consistent and meaningful efforts to protect the limit’s enforceability. This means that where an employee advances to higher levels of compensation and responsibility, it is incumbent on the employer to reassert its reliance on the contractual notice limit and to ensure that the employee both understands and accepts the employer’s position.

Having failed to this, the Judge found that the termination clause was unenforceable and awarded reasonable notice of 12 months.

There are three ways that an employer can avoid this from happening :

Include a clause in the original contract that the termination clause continues to apply throughout the employment period notwithstanding any change in position or compensation.
Include a line in all promotion and compensation letters reconfirming the termination clause.
Have a termination clause which is more reflective of common law reasonable notice.

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Barry B. Fisher LL.B.

Barry B. Fisher, LL.B., is a mediator and arbitrator of both employment and labour relations matters. He offers three forms of ADR based on clients’ needs: Mediation, Arbitration and Med/Arb. Barry is from the evaluative school of mediation and brings his over 30 years' experience as an employment lawyer and legal author to the dispute. In addition to his knowledge of the legal issues involved in these disputes, he also has a deep understanding of the psychological factors that motivate both employees and employers. By combining these two skills, Barry is able to achieve a settlement rate of over 80% of the disputes that he mediates.