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ARTICLE · 13 JUNE 2016

The Dangers Of Fixed Term Employment Contracts

Torkin Manes LLP
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The recent Ontario Court of Appeal decision of Howard v. Benson Group Inc. (The Benson Group Inc.) offers a good reminder to employers of the dangers of entering into fixed term employment contracts with employees.

CanadaEmployment and HR
Daniel Pugen
Daniel Pugen
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The recent Ontario Court of Appeal decision of Howard v. Benson Group Inc. (The Benson Group Inc.) offers a good reminder to employers of the dangers of entering into fixed term employment contracts with employees. The case confirmed that absent an appropriately worded termination clause, an employer will be liable to pay the employee until the end of the contract's term. This will be the case even if the employee obtains a new job during that time period and even if the remainder of the term far exceeds the employee's common-law notice period.

The Case

The employer ran an automotive service centre and the employee was hired as "Truck Shop Manager" and then as "Sales Development Manager" for a five-year fixed term. The employee was dismissed 23 months later. The employer sought to rely on the following termination clause, which would have limited the employee to 2 weeks' notice/pay:

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