U.S. Companies Beware That Reasonable Notice Upon Termination May Apply

Cross-border companies need to be aware that even with an American employment contract, Canadian law may apply in favour of an employee. In Stanley v. Advertising Directory Solutions Inc.,¹ the employee had more than one employer: the American parent and the Canadian subsidiary. Although the employment contract with the American parent stipulated at-will hiring (termination without notice), the court struck this out as being void and held that Canadian law of reasonable notice applied, because the employee was effectively working for the Canadian subsidiary. Importantly, the court focused its analysis on the "actual employment relationship" rather than a letter setting out the terms of employment.