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Do I get Anything if Terminated on a Fixed-Term Contract?

Yes, and probably more than you think.

For many employees, the first time they read their employment contract is when they are hired, and the second is when they are fired. It can be years or even decades between signing a document and parts of it becoming relevant, which can be daunting for many employees who need help with their rights.

Adding to this is that Employment Law is usually rapidly changing, and something that may have been true a few years ago is now completely the opposite. This is why getting legal advice before signing anything upon termination is critical.

Fixed-term contracts expertly highlight this difference between what an employee may think they are entitled to and what a Court may award.

What is a Fixed-Term Contract?

As the name would suggest, a fixed-term contract is for a fixed period of time, with a start date and end date. Once the scope of the contract is complete, it ends.

Due to this requirement, the contract must be in writing. It does not need to be a typed or formally signed document; contractual relationships can be formed via an emoji.

Task-based contracts are common in everyday life, such as ordering three shirts online. You pay the vendor, and they deliver the items. The relationship ends once all three shirts arrive.

This is in contrast to an indefinite-term contract, which most employees are on, which only has a start date. The contract continues until either side chooses to end it.

These types of ongoing contracts are also very common in everyday life. Most digital services, such as streaming function this way. Your Netflix membership ends only if you don’t pay them and so they cancel it or you choose to cancel.

What Happens on Termination?

The main difference between the two types of contracts in employment is what happens when they end.

For an employee on an indefinite-term contract, their employment is usually ended by resignation or termination. Under the ESA and the common law, if terminated without cause (or invalidly terminated for cause or constructively dismissed), that employee is entitled to notice or pay in lieu of notice. Determining the correct amount of pay in lieu of notice is usually done via employment litigation.

If an employee on an indefinite term contract finds a comparable job, their common law pay in lieu of notice is generally limited to the time they were unemployed.

If an employee on a fixed-term contract ends employment on the date set out in the contract, they are owed nothing. The contract has been completed.

If a fixed-term contract is ended early, the default award is the balance of the contract.

Elder v. Max Wright Real Estate, 2023 ONSC 5661 was a case dealing with this exact issue.

The Plaintiff, Leif Elder, was hired as a real estate agent on a one-year fixed-term contract. At the end of the one-year, it was automatically renewed for an additional year from June 10, 2022, to June 10, 2023. Leif Elder was terminated on July 5, 2022, less than a month into the one-year contract. The Plaintiff found a new job nine days after being terminated.

Due to the contract’s lack of a valid termination clause, the Court awarded the Plaintiff damages for eleven months of earnings for the balance of the one-year contract. If Mr. Elder had been on an indefinite contract, he would have been likely awarded only a few weeks for his minimum entitlements under the Employment Standards Act, 2000.

But Why?

Consider the example above: Someone orders three shirts online. If only one arrives, what is that person entitled to? The automatic answer for most people is a refund for the missing two shirts, which is the balance of the contract.

The same is true for fixed-term employment contracts. The terminated employee is entitled to a refund for the balance of the contract. In most cases, that will be a significant amount of money. This also reflects the intention of the contract. If someone is hired on a fixed-term contract for a year, they expect to be employed for a year.

For the lawyers at De Bousquet PC, the most important thing about these types of employment contract issues, including terminations, constructive dismissal, or employment contract reviews is the person.

The exact language used in a contract is important, and small changes in wording can have consequences worth thousands of dollars, but that means nothing if you cannot get legal advice from lawyers you trust. You are an individual going through what, for many people, is the worst time in their lives. The stress of losing your job, loss of self-worth, and financial pressures can make anything said to you sound like the adults from Charlie Brown.

We at De Bousquet PC pride ourselves on our client-focused practice and our belief that while the law may be complicated, but getting legal help should never be. Contact our firm today.



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