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ARTICLE · 17 JUNE 2022

Other "F" Words: Understanding Fixed-Terms And Failsafe Clauses

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Recent developments in employment law necessitate the need for employers to turn their minds to the careful construction of termination provisions within employment agreements.

CanadaEmployment and HR
Mark Josselyn
Mark Josselyn
Nicole Hilliard
Nicole Hilliard
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Recent developments in employment law necessitate the need for employers to turn their minds to the careful construction of termination provisions within employment agreements. Employers considering using fixed-term contracts should be particularly cognizant of the need for careful drafting and the risks associated with the same. Contracts drafted incorrectly can result in uncertainty and unanticipated cost – including employees being entitled to significantly more compensation upon termination than originally contemplated by the employer when putting pen to paper.

In a recent Ontario Superior Court decision, Livshin v The Clinic Network of Canada Inc., 2021 ONSC 6796, Justice Black struck a "for cause" termination provision in a fixed-term employment agreement because the provision failed to comply with the Employment Standards Act, 2000 ["ESA"]. The provision stated:

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