Terminated Contract Employee Receives Three Years’ Pay from Prior Employer

by | Sep 6, 2016 | For Employees

In many cases, employers must provide terminated employees written notice of termination or pay instead of notice. How much notice or pay may depend on the type of employment contract. In some cases, a “contract employee” or those with a “fixed-term contract” may be entitled to extensive damages if they are terminated before the end of the contract.

What is a Fixed-Term Contract?

A fixed-term contract of employment is one where the employer and employee agree on an end date of employment. Jobs commonly referred to as “contract positions” are examples of a fixed-term contract. Because there is an end date, no notice of termination is required when the contract ends. However, what happens when an employer terminates an employee early under a fixed-term contract? In a recent Court of Appeal decision, the court awarded the employee all of the wages that he would have earned for the remainder of his contract.

The Case: Howard v. Benson Group Inc.

The employee, Mr. Howard, agreed to a fixed-term contract of five years with his employer. After almost two years, the employer terminated Mr. Howard without cause. The employer only gave Mr. Howard two weeks termination pay.

Even though the contract stated how much Mr. Howard would receive if terminated early, the court decided that this part of the contract was not valid. The court then concluded that because it was a fixed-term contract, the proper notice that Mr. Howard was owed was the remainder of his contract.

The Court also found that Mr. Howard did not have to mitigate his losses. As we have written before, terminated employees normally must take reasonable steps to look for a new job. Any earnings may be deducted from what the terminated employee receives. For Mr. Howard, he did not have this legal obligation and he received the full three years’ wages.


If you are a “contract employee” or have a “fixed-term contract” and you are terminated early, you may be owed a significant amount of notice or pay from your employer. In Mr. Howard’s case, he received almost three years of his wages rather than two weeks’ pay.

Many employers do not draft proper termination provisions. Whether your contract is fixed or indefinite, it is always helpful to consult an employment lawyer to determine whether your termination provision is enforceable when you are terminated.

If you would like to speak with an experienced lawyer at MacLeod Law Firm about this issue, please contact us at [email protected] or 647-204-8107.

The material and information in this blog and this website are for general information only. They should not be relied on as legal advice or opinion. The authors make no claims, promises, or guarantees about the accuracy, completeness, or adequacy of any information referred to in this blog or its links. No person should act or refrain from acting in reliance on any information found on this website or blog. Readers should obtain appropriate professional advice from a lawyer duly licensed in the relevant jurisdiction. These materials do not create a lawyer-client relationship between you and any of the authors or the MacLeod Law Firm.



Recent Posts

Laid Off and No Recall in Sight?

The Employment Standards Act the (“ESA”) contains a provision which allows for temporary lay-off. Pre Covid-19, the ESA told employers that they could lay off an employee for 13 out of 20 weeks, or 35 out of 52 weeks if the employer continues the employee’s benefits, for example.

read more

Paid Sick Leave? Sort of

With the numbers of COVID-19 cases rising again, especially in the GTA, many employees are asking me as a Toronto employment lawyer what happens if they become sick and they are forced to stay home for 14 days. Following the end of the Canada Emergency Response...

read more

Toronto Office

702 - 2 Bloor Street West,
Toronto, ON M4W 3E2

Barrie Office

277 - 92 Caplan Avenue,
Barrie, ON L4N 9J2

Collingwood Office

220 - 1 First Street
Collingwood, ON
L9Y 1A1



+1 (888) 640-1728


(866) 883-8445


[email protected]

Toronto Office

702 - 2 Bloor Street West, Toronto ON M4W 3E2

Barrie Office

277 - 92 Caplan Avenue, Barrie ON L4N 9J2

Collingwood Office

220 - 1 First Street, Collingwood, ON L9Y 1A1


Subscribe To Our Newsletter

Join our mailing list to receive the latest news and updates from our team.

You have Successfully Subscribed!