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Employment law principles start with a deceptively simple concept: in every employment agreement, there is an implied term that the employer must provide reasonable advance notice of termination, absent just cause for dismissal.

From this principle, litigation has become a constant remedy to employees and often a thorn to many employers. There is no defined cap to the notice period, although it has tended to see a high end range of roughly two years.

The employee must always take reasonable steps to seek new employment, apart from the minimum statutory sums referenced below. Any such income earned will generally reduce the claim.

The Limiting Term

For this reason, many employers seek to contract-out of this obligation, which is possible with proper legal advice and careful contract drafting. There are many basic rules which must be followed to achieve this end, the most prominent of which is that the agreement cannot affirmatively deny the employee protections offered by statute.

Ontario’s Employment Standards Act sets out minimum notice and severance obligations which can add up to as much as 34 weeks’ pay. The same statute mandates benefits be continued for as long as 8 weeks. These obligations must always be honoured to insure that the contract is enforceable.

The contract should be given to a new employee before he or she resigns from other employment. Similarly present employees must receive something of value when presented with a new contract containing such a limiting term.

An employment contract should always be revisited when an employee is promoted to a more senior position. This will avoid the argument often raised that the “substratum” of the contract has been eliminated in the case of such a promotion. There is nothing wrong with offering an employee a promotion subject to signing a similar contract or even the same one.

Legal advice should always be taken when considering such terms.

Exceptions to the Contract

Even when an employment contract is in place, there remains a host of arguments to avoid the contract on termination.

The employer’s obligation of good faith and fair dealing at the time of termination cannot be eliminated by contract. These obligations include the need to conduct a proper and fair investigation before terminating based on allegations of serious wrongdoing. Human rights remedies also are generally not impacted by a clause defining a termination payment.

Employment law is very complex. Generally, an employer acting fairly will likely face only the claim set by contract or the claim for fair notice. An employer acting otherwise will face significant damage exposure.

Legal Advice is Critical

Whether you are an employee or an employer, legal advice must always be the foundation of your actions. Preventive advice to an employer can avoid enormous liability. Employees must understand the remedy available and how to achieve it at a fair cost.

If you are facing such employment issues, contact Sultan Lawyers by phone at 416.214.5111 or by here.


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