What kind of notice of termination am I entitled to if I have signed an employment contract?
The answer is it depends on several factors, including whether the contract contains a termination clause and whether that clause has been drafted properly. Many employment contracts contain a termination clause that limit employee’s right to notice of termination to the minimum notice required under the Employment Standards Act. Whether an employer is entitled to rely on such a termination clause depends on how it is drafted. In a recent case from British Columbia, the court was faced with deciding whether to enforce this kind of termination clause.
In Cottrill v Utopia Day Spas and Salons Ltd., Ms. Cottrill, a skincare therapist, began working for the employer in May 2004, after successfully completing a “practical interview” in April 2004. Ms. Cottrill was informed that her first day would be on May 3, 2004. On her first day, she went through an orientation program, which included meeting with various company representatives and signing a written employment contract. This contract had a termination clause that limited her entitlement to termination to the minimum standards required under the Employment Standards Act of British Columbia (ESA).
Ms. Cottrill worked for the employer for approximately 11 years, until she was terminated for just cause at the end of a 3-month performance improvement plan. My blog last week dealt with whether the employer had just cause to terminate Ms. Cottrill. The court found that the employer did not have just cause to dismiss Ms. Cottrill (to learn why, read my blog from last week. At the time of her termination, she was entitled to eight weeks’ notice or termination pay under the ESA.
The employer argued that, according to her employment contract, Ms. Cottrill was only entitled to eight weeks’ termination pay. Ms. Cottrill argued that the employment contract did not govern her employment contract because it was given to her after she had already been hired. Therefore, Ms. Cottrill’s employment was governed by the telephone call in which Ms. Cottrill was offered the job, which was a verbal agreement without a termination clause. If Ms. Cottrill was successful in this argument, she would be entitled to notice or termination pay between 8 and 11 months.
The judge found in the employer’s favour: he found that there was no discussion of any essential terms of the employment relationship in the telephone call and that Ms. Cottrill signed the contract during her orientation, but before she performed any work for the employer. Therefore, the contract was formed when Ms. Cottrill signed the employment contract, not when she accepted the position over the phone.
Lessons to be Learned
Most employment contracts contain a termination clause which takes away your right to reasonable notice of termination. This will result in you receiving much less termination pay than you would otherwise receive (to use Ms. Cottrill as an example, had she not signed the contract, she could have been entitled to 6 more months of termination pay).
Spending an hour with an employment lawyer reviewing each term of an employment contract will ensure that you know the legal implications of each clause in the contract and may lead to changes to the offer that benefit you. If you have an employment contract that you would like reviewed, a lawyer at MacLeod Law Firm would be happy to assist you.
If you have been recently terminated, you should speak to an employment lawyer, even if you’ve signed an employment contract with a termination clause. If you would like to speak to a lawyer at MacLeod Law Firm, you can reach us at [email protected] or 647-204-8107.
Very recently, the Ontario Court of Appeal released another decision about employment contract termination clauses that significantly helps employees. If you are interested in previous cases see here and here. What are Termination Clauses? These sections of...
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