What happens when an employer terminates an employee on a
fixed-term contract? The Ontario Court of Appeal in Howard v Benson
Group Inc. recently weighed in on the issue. The Court
held that the employee was entitled to an amount equal to his
salary and benefits for the unexpired term of the employment
contract rather than reasonable notice (which may have been
The facts were simple. The employee entered into a five year
employment agreement but was terminated after 23 months. The
agreement expressly provided for early termination, including
termination without cause. The motion judge found the termination
clause void for ambiguity and, as a result, there was no evidence
of an intention to oust the common law presumption of reasonable
notice. Therefore, the employee was entitled to reasonable notice.
The decision was appealed by the employee.
The Court overturned the motion judge's, finding that a
provision stating that employment is for a fixed term, if stated
unambiguously, will oust the implied term that reasonable notice
must be given. The invalidity of the termination clause had no
effect on the fixed term nature of the employment contract which
unambiguously remained a fixed term contract. As a result, the
employee was owed a sum in an amount equal to his salary and
benefits for the unexpired term of the employment contract.
The Court then turned to the issue of whether the employee had a
duty to mitigate. He held a fixed term employment contract
obligates an employer to pay an employee to the end of the term,
and such an obligation will not be subject to mitigation in the
absence of contractual provisions to the contrary. Accordingly, the
employer was obligated to pay out the remaining 37 months of the
Written with the assistance of Danny Urquhart, articling
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