Sit Back And Relax – Is There A Duty To Mitigate After Termination Of A Fixed-Term Contract?

The Ontario Court of Appeal recently issued its decision in Howard v. Benson Group Inc. 2016 ONCA 256, relating to the termination of a fixed-term employment contract. The Plaintiff, Mr. Howard, was a Truck Shop Manager who entered into a five year fixed-term employment contract with the Defendant starting September 2012. Twenty-three months into the contract, the employer terminated him with two weeks’ pay in lieu of notice, relying on a provision in the contract that limited his severance to his Employment Standards Act  minimum.

At Trial, the Judge held that the termination clause was unenforceable on the grounds of ambiguity – a finding that was not appealed. Since the Trial Judge struck out the clause limiting his severance to the statutory minimum, the Court held that the Plaintiff’s damages should be calculated on the basis of an implied term of reasonable notice.