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termination clauses

Termination clauses: (Yet) another one bites the dust

I advise employers and employees and therefore regularly draft and review termination clauses. The issue of whether a termination clause complies with the minimum notice requirements set out in the Employment Standards Act (the “ESA”) may be the most litigated issue in employment law over the past 5 years. So employment lawyers like me pay close attention to what the courts are saying on this issue.

 

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Doug’s top 5 employment law stories of 2019

We have started the last month of 2019 and it is time for my annual top employment law stories of the year. 2019 has been a relatively good news year for Ontario employers.

 

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Termination clauses: Not just for indefinite employees

In a recent decision, Ontario’s Divisional Court reminds us of the importance of proper termination clauses in fixed term contracts. In Ferguson v. Mitsche & Aziz Inc., the Divisional Court upheld a Small Claims judgment awarding the maximum $25,0000.00 limit in damages to an employee who was dismissed five months into her one-year fixed term contract.

 

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Three popular articles this week on HRinfodesk

The three popular articles this week on HRinfodesk deal with the interpretation and enforceability of termination clauses, changes and improvements to services, benefits and credits for Canadians for the new tax filing season and improved ways for businesses to meet their reporting obligations.

 

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5 employment law predictions for 2018

What’s in store in 2017 for HR and payroll

‘Tis the Season and 2017 is coming to a close. With this, I am predicting some of the trends to follow from an employment law perspective of 2018. Here are 5 trends to follow in the new year.

 

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Case study: Why you need to periodically review your employment contract

A well-drafted employment contract is the best employment law investment an employer can make. It can enhance or expand management’s rights, and it can save the employer thousands of dollars in termination costs.

 

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Top 5 mistakes employers make in their contracts

Employment contracts are a useful tool for employers. But often, employers make mistakes when creating their contracts. Here are five of the main mistakes to watch out for.

 

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Don’t take a chance on it: The uncertainty of ESA-only termination clauses

In January 2017, the Ontario Superior Court of Justice released its decision in Cook v. Hatch upholding a less than perfect termination clause that failed to reference statutory severance pay or provide for continued health benefits during the statutory notice period. A month later, the Court of Appeal responded with its decision in Wood v. Fred Deeley Imports Ltd. where it overturned a motion judge’s ruling upholding a similar termination provision. And so, the age old debate about the enforceability of ESA-only termination provisions rages on.

 

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Generous termination clauses: Think twice before making promises #learnthelatest

Learn the Latest at the Ontario Employment Law Conference

Many employers include termination clauses in employment contracts to limit their liability when dismissing employees. When employers draft generous termination provisions providing for more than statutory minimums, they must follow through on that generosity when terminating employees. Failing to do so could leave employers exposed to full liability under the common law.

 

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Uncertainty with termination clauses continues

There are few areas of employment law more in flux (and vexing to lawyers) than that surrounding the enforcement of termination clauses. Part of the frustration is when the Courts provide seemingly contradictory messages on whether termination clauses will be upheld. In January 2017 alone, the Ontario Superior Court of Justice released two decisions that appear, on their face, to be somewhat at odds.

 

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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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Termination clauses – The legal debate

It appears that the saga of judicial interpretation and consideration of termination clauses will continue, with predictably unpredictable results. Courts will enforce termination clauses that limit an individual’s entitlement to notice of dismissal, but the onus will be on the employer to show that the clause should be enforced.

 

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Small claims court rules termination clause that violates ESA in future is unenforceable

This decision is another reminder to employers to ensure that termination clauses provide for all entitlements prescribed by the Employment Standards Act in order for them to be considered valid and enforceable. The company in this case should never have carved out its obligation to provide statutory Severance Pay.

 

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Agreement to sign an agreement

The issue of whether termination clauses contained within employment agreements will be enforceable is one that routinely arises. As I have discussed on many occasions, many employers weaken their legal position by entering into a verbal agreement, or presenting an “offer letter”, and then subsequently asking their new employee to sign a far more detailed employment agreement that is designed solely for the benefit of the employer.

 

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