Reasonable Notice and Termination Provisions in Employment Contracts in Ontario

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KPA Lawyers - May 29, 2018

If you are let go or fired from your job without cause, you might be entitled to a payment that is equal to months of your former salary, depending on factors such as your age or the length of your employment. This is because the courts have long recognized that employment is one of the most fundamental aspects of a person’s life, as it contributes to a person’s sense of self, self-worth, emotional well-being, as well as the means through which people support themselves.[1] As a result, employers must do one of the following when letting you go: 1) provide you notice that your employment will come to an end at a fix date in the future, or b) let you go right away, but provide you salary which would equal what you would have made had you worked until that fixed date in the future. This is described as reasonable notice at common law or pay in lieu of notice.

Despite the above, there is a way for an employer to avoid having to pay you what you would otherwise received. They do this by placing a section in your employment contract that lowers the pay you would have received to a legal minimum. This minimum, outlined in the Employment Standards Act (“ESA”), can reduce the amount of salary you would have otherwise received from months to weeks.

Now, does it mean that you will only receive the ESA minimum if your employment contract says that on termination, you will be paid in accordance with the ESA? The answer is no. Employers must draft these “termination provisions” in a very specific way, and there are multiple ways in which a court might find that it can award you pay much higher than what is required by the ESA. For example, if the termination provision does not clearly exclude the reasonable notice and provide that only the minimum in the ESA is going to be paid, the court might decide that the clause did not limit the notice pay to just the minimum.

This is exactly what happened to the termination provision in Bergeron v Movati Athletic (Group) Inc.[2] In that decision, an employee was the general manager of a health and fitness facility for a year and a half. Her employment contract contained the following termination provision:

“…may terminate your employment without cause at any time during the term of your employment upon providing you with notice or pay in lieu of notice, and severance, if applicable, pursuant to the Employment Standards Act, 2000 and subject to the continuation of your group benefits coverage, if applicable, for the minimum period required by the Employment Standards Act, 2000, as amended from time to time.”

When she was let go, the minimum under the ESA would have only entitled her to two weeks notice.

Instead, the court found that this termination provision was unclear. The termination provision does not say that the employer was only going to pay the minimum notice pay as is required by the ESA. All it said was that the ESA would be obeyed, which is not enough. As a result, the court found the employee was entitled to three months notice instead of the two-week minimum under the ESA.

The above is only one example of the ways in which a termination provision can fail to limit the reasonable notice period provided under the common law. That’s why it is important to seek out legal advice if you are let go from your job, as you might be entitled to more pay than what is required under the ESA.

[1] Reference re Public Service Employee Employee Relations Act (Alberta), 1987 CanLii 88 (SCC).        [2] Bergeron v Movati Athletic (Group) Inc. 2018 ONSC 885.

#employmentcontract #reasonablenotice #termination #employmentstandardsact #jonathandebiasi

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