When it comes to termination clauses in employment contracts, Canadian employers must navigate a delicate balance between protecting their own interests and ensuring that they are providing fair and reasonable treatment to their employees. One key aspect of this balance is the use of language that limits or removes the right to common law reasonable notice, while also preserving all statutory minimum entitlements.
At its core, common law reasonable notice is a principle that requires employers to provide a reasonable amount of notice to employees before terminating their employment. This notice period is typically determined by a number of factors, including the length of the employee's service, their age, and their role within the organization. However, while this principle is well-established in Canadian law, it can also be a source of uncertainty and risk for employers.
One way to mitigate this risk is to use language in termination clauses that unambiguously limits or removes the right to common law reasonable notice. This can be done by setting a specific notice period, such as a number of weeks or months, or by stating that the employee is only entitled to the statutory minimum notice period under the relevant jurisdiction.
At the same time, it is important for employers to ensure that they are preserving all statutory minimum entitlements for their employees. These entitlements may include things like severance pay, notice pay, or other benefits that are required by law. By clearly stating in the termination clause that these entitlements will be preserved, employers can avoid any confusion or disputes down the line.
An example of this principle in action can be seen in the case of Bryant v Parkland School Division, 2022 ABCA 220. In this case, the employee was terminated without cause and was provided with statutory minimum notice under the Alberta Employment Standards Code. However, the employee argued that they were entitled to common law reasonable notice as well. The court ultimately ruled in favor of the employer, stating that the termination clause in the employee's contract clearly and unambiguously limited their entitlement to statutory minimum notice only.
The bottom line – Canadian employers that intend to include termination clauses in their employment contracts should consider using language that unambiguously limits or removes the right to common law reasonable notice, while also preserving all statutory minimum entitlements. This can help to mitigate risk and avoid disputes, while still ensuring that employees are treated fairly and in accordance with the law. The outcome in Bryant v Parkland School Division, 2022 ABCA 220 serves as a reminder of the importance of clear and concise language in termination clauses.
Employers are encouraged to seek the advice of experienced employment counsel to draft new employment contracts, and to regularly review existing employment contracts to ensure their enforceability because of constantly evolving case law.
