Termination clause

Requiring a longer period of notice of termination from employee than employer
By Brian Kenny
|Canadian Employment Law Today|Last Updated: 11/27/2013

Question: Can a termination clause require a longer period of notice for the employee to terminate the relationship if it gives the employer the right to terminate with minimum statutory notice? Can a blanket termination clause (one intended to cover any jurisdiction in Canada) be considered too vague to be enforceable?

Answer: When drafting a termination clause, employers must ensure the contract clearly limits notice to the statutory minimum, as the common law presumes an employee can only be dismissed upon reasonable notice. This presumption can only be rebutted where a contract clearly and precisely limits an employee's notice to the statutory minimum. To do so, the employment contract must clearly state that the employee has expressly agreed that any notice will be governed by the relevant statutory authority. Further, a clause of this nature must form part of the employment contract executed by the employee. Thus, policy manuals that purport to limit an employee's entitlement to the statutory minimum will not be enforceable, since the policy manual is not part of the express agreement between the employee and employer.

With respect to a blanket termination clause, as referred to in the second part of the question, there is more risk that such clause may fall short of rebutting the common law's presumption of reasonable notice upon dismissal. For example, a termination clause that was to be determined in accordance with “provincial law” was too ambiguous and uncertain to be enforceable. As such, in Boulé v. Ericatel Ltd., the employee was held to be entitled to reasonable notice pursuant to the common law.