Perhaps the most important clause in any employment contract is
the termination clause. Without it, an employee is entitled
to reasonable notice of termination (in the absence of just cause).
A written termination clause can even allow an employer to limit
notice (or severance in lieu of notice) to what is required under
the applicable employment standards legislation – the
absolute minimum required by law.
However, drafting enforceable termination clauses can be tricky.
A number of decisions across Canada have put the fear into
employers' lawyers to ensure that these clauses are not only
clear and concise (which all contracts should be anyway) but
consistent with every aspect of the employment standards
legislation requirements. Lawyers for employers in BC might be able
to breathe a little easier, though, in light of a couple of cases
in the last 18 months in which the BC courts found termination
clauses to be enforceable, even in otherwise less-than-perfect
In 2014, the BC Court of Appeal in Miller v.Convergys CMG Canada Limited Partnership upheld the
enforceability of a termination provision that limited
notice/severance to the requirements of the BC Employment
Standards Act. The termination clause was worded very simply:
"[The employer] may terminate your employment for cause, or by
providing you with notice, or pay in lieu of notice in accordance
with the Employment Standards Act of British
Columbia." The contract, however, included a misplaced
and inapplicable probationary clause which the employee's
lawyer argued that, when taken together with the termination
clause, resulted in the termination clause being inconsistent with
the requirements of the Employment Standards Act.
The employee's lawyer also argued that the combination of the
misplaced/inapplicable probationary clause and the termination
clause resulted in the contract being ambiguous (and therefore the
termination clause was unenforceable). The Court of Appeal
disagreed and upheld the enforceability of the termination clause.
The employee's claim was dismissed.
More recently, in Damani v. Stuart Olson Construction
Ltd., the BC Supreme Court upheld a termination provision
which was far more complicated. The clause read:
probationary period, [the employer] shall be entitled to terminate
your employment at any time without just cause on giving you notice
of the termination or, at [the employer's] absolute discretion,
by paying you compensation in lieu of notice of an amount
equivalent to the regular wages that you would have received during
the applicable notice period, or any combination thereof. Your
notice, or payment in lieu of notice, will be calculated from the
Start Date and [the employer] shall provide you with 2 weeks'
for every year (or part year) worked with [the employer], to a
maximum of 3 months' notice or pay, or your entitlement for
termination notice or termination pay pursuant to the applicable
employment standards legislation, as amended, whichever is
In other words, the employee was entitled to 2 weeks'
notice/severance per year of service, up to a maximum of 3
The employee's lawyer argued that the termination clause was
"unclear, convoluted and confusing". Despite the
language of the termination provision being "long and
complicated" (in the words of the trial judge), it was
nevertheless clear and unambiguous. The clause was upheld and the
employee's claim was dismissed.
These cases seem to reflect the BC Courts' willingness to
take a practical approach to the interpretation of termination
clauses. We certainly don't recommend that employers try to
draft these clauses without legal advice, since there are still
many issues that can render a termination clause useless, but
hopefully this trend of upholding termination provisions in less
than perfect contracts continues.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Unfortunately, reasonable accommodation for employees in the workplace continues to be the source of significant litigation and even today we continue to see outrageous examples of employers behaving badly.
We are now beginning to see reported cases involving charges and subsequent fines laid against employers for failing to provide information, instruction and supervision to protect a worker from workplace violence.
On October 13, 2016, the Supreme Court of Canada denied leave to appeal an Ontario Court of Appeal decision which ordered an employer to pay a former employee 37 months of salary and benefits following termination.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).