Being wrongfully terminated is stressful and often surprising. For employees on a fixed-term contract, it is often blindsiding. One recent case highlights that if you are on a fixed-term contract, you may be entitled to more than you think.
In, Tarras v The Municipal Infrastructure Group Ltd., a former employee was awarded $479,000 after being wrongfully terminated before the end of his contract.
Mark Tarras was a Professional Engineer for The Municipal Infrastructure Group Limited. In December 2019, Mr. Tarras entered into a three-year employment contract with his employer that would pay him a base salary of $250,000 per year, plus benefits.
However, on November 25, 2020, the employer dismissed Mr. Tarras on a “without cause” basis, ending his salary and benefits effective December 31, 2020. This termination came almost two years before the agreement was set to end. Mr. Tarras sued his employer for wrongful termination.
The Court found that the termination clause in his employment contract was illegal and therefore, unenforceable. As the employment contract was deemed unenforceable by the Court, the employer was obligated to pay Mr. Tarras until the end of the fixed-term contract.
Mr. Tarras was awarded 23 months, which included $479,000 for salary alone, which was the balance of his contract.
Employment contracts are often found to be unenforceable. One of the reasons for this is because many termination clauses contain outdated language about termination on a ‘for-cause’ basis. The Ontario Court of Appeal has made it very clear that this is a very simple test – unenforceable means unenforceable. As the employee who has been wrongfully terminated, an unenforceable employment contract means that you will be entitled to the common law reasonable notice and obliged to mitigate your damages.
For an employee on a fixed-term contract, the situation is completely different. The employee is entitled to damages representing the remaining value of the contract. There is no obligation to mitigate.
An Employee’s Duty to Mitigate (or Not)
For wrongful dismissal cases that involve fixed-term contracts, the Court here said there is no duty to mitigate. Mitigation is often a very important element of a wrongful dismissal case, and it can have an impact on the damages you may receive in your case. Normally, any terminated employee has a duty to mitigate. This means that they must be actively looking for new employment. This is not necessarily the case for fixed-term employment contracts. This is because the damages you are entitled to are not fixed and could not be known at the time the contract was signed.
One feature of a fixed-term employment contract is that there is an element of certainty, including the amount that would have to be paid for early termination. The courts have said that there is no difference between a fixed amount and an amount that can be calculated from the terms of the agreement.
In this case, Mr. Tarras and the employer entered into a fixed, three-year contract. The employer promised to pay that salary for three years and Mr. Tarras expected the employer to honour that contract. As the employer failed to pay for the three years, Mr. Tarras was entitled to the difference. Mr. Tarras did not need to mitigate his damages, as they were fixed.
If you have been fired, you should seek the advice of an employment lawyer to see whether your situation is a case of wrongful termination. Employment lawyers have the expertise to recognize unenforceable employment agreements right away and advise you on your options. You could be entitled to much more than what your employer is initially offering you. At De Bousquet PC, we are experts in employment law. We can help you maximize your entitlements if you have been terminated, and guide you through the process of pursuing your wrongful termination case.