Contract not fixed-term without definite end date: Court

Indefinite term contract requires reasonable notice of termination: Court
|Canadian Employment Law Today|Last Updated: 06/15/2011

An Ontario employer does not have to pay a fired maternity leave replacement for the balance of his contract because the end date of the contract wasn’t fixed, the Ontario Superior Court of Justice has ruled.

Gilbert Scott was hired by United Way charitable organization in Brant, Ont., in June 2009. He was hired as a temporary replacement for the organization’s campaign director, who went on maternity leave.

When the position was initially posted, the posting indicated it was for a “one year contract to cover for maternity leave.” Scott applied for the job in May 2009 and noted that he was aware it was a one-year contract. United Way offered Scott the position on June 10, 2009, and provided him with a contract that set out the job description, salary and benefits. It also stated the position would start on July 27 and end “around or about the 1st of October, 2010.” It reiterated that the position was covering a maternity leave and the completion date was “somewhat flexible” as it was based on when the regular campaign director decided to return to work.

However, in January 2010, United Way decided Scott was unable to perform the job and terminated his employment. The organization treated the firing as without cause and paid Scott three weeks’ salary in lieu of notice.

Scott challenged the dismissal, arguing he performed his duties well and he didn’t receive any complaints or warnings before he was let go. He also claimed his contract was a fixed term contract and United Way owed him payment for the balance of the contract, until Oct. 1, 2010 or when the regular campaign director returned to work from her maternity leave.

The court noted that although the original job posting stated the position was a one-year contract, this stipulation was not carried over into Scott’s employment contract. The contract referred to the term ending around the beginning of October 2010 but specified there was flexibility due to the undetermined date the campaign manager would end her maternity leave. Though the standard maternity leave is up to a year, the full-time employee could have chosen to return at any time.

Due to this flexibility in the contract term, the court found Scott’s position was of indefinite duration and not a fixed term. This meant Scott would be owed reasonable notice — or pay in lieu of — if termination and not pay for the balance of the contract.

The court also found Scott’s termination was without cause, so standard reasonable notice was also applicable for that reason. Since United Way treated Scott’s dismissal as without cause, it was irrevelant whether Scott was capable of performing his job duties or was given a chance to improve, said the court. Any employment contract of no fixed term can be terminated with reasonable notice.

However, the court found Scott was entitled to more than the three weeks’ salary United Way paid him upon termination. Given the job had “considerable responsibilities of management nature,” the court found Scott was entitled to six weeks’ notice, or pay in lieu, for his five months’ service as acting campaign director. It also ordered United Way to pay Scott 35 hours of overtime, even though he had not proven it had been approved by the executive director as stipulated in the employee handbook, because he was “entitled to payment for actual hours he worked.” See Scott v. Brant United Way, 2010 CarswellOnt 10728 (Ont. S.C.J.).