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Employment - Fixed-Term Contracts

. Howard v. Benson Group Inc. (The Benson Group Inc.)

In Howard v. Benson Group Inc. (The Benson Group Inc.) (Ont CA, 2020) the Court of Appeal considers the law of terminating a fixed-term employment contract:
[20] There is a common law presumption that every employment contract includes an implied term that an employer must provide reasonable notice to an employee prior to the termination of employment. Absent an agreement to the contrary, an employee is entitled to common law damages as a result of the breach of that implied term: Bowes v. Goss Power Products Ltd., 2012 ONCA 425, 351 D.L.R. (4th) 219, at para. 23. This presumption can only be rebutted if the employment contract “clearly specifies some other period of notice, whether expressly or impliedly”: Machtinger v. HOJ Industries Ltd., 1992 CanLII 102 (SCC), [1992] 1 S.C.R. 986, at p. 998; Ceccol v. Ontario Gymnastic Federation (2001), 2001 CanLII 8589 (ON CA), 55 O.R. (3d) 614 (C.A.), at para. 45. The question, then, is whether the motion judge erred in holding that the Employment Contract, without Clause 8.1, failed to rebut that presumption by clearly specifying some other period of notice, expressly or impliedly.

[21] In my view, the motion judge erred in so holding. Where an employment agreement states unambiguously that the employment is for a fixed term, the employment relationship automatically terminates at the end of the term without any obligation on the employer to provide notice or payment in lieu of notice. Such a provision, if stated unambiguously, will oust the implied term that reasonable notice must be given for termination without cause: Lovely v. Prestige Travel Ltd., 2013 ABQB 467, 568 A.R. 215, at para. 135; Ceccol, at para. 25.

[22] Of course, parties to a fixed term employment contract can specifically provide for early termination and, as in Bowes, specify a fixed term of notice or payment in lieu. However, and on this point the appellant and the respondent agree, if the parties to a fixed term employment contract do not specify a pre-determined notice period, an employee is entitled on early termination to the wages the employee would have received to the end of the term: Lovely, at para. 136; Bowes, at para. 26; Canadian Ice Machine Co. v. Sinclair, 1955 CanLII 44 (SCC), [1955] S.C.R. 777, at p. 786.


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