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Beware of Fixed-Term Contracts!

By November 24, 2016August 17th, 2020Employment Law

Another case from the Ontario Superior Court was released recently and it confirmed an important point for employers: beware of fixed-term contracts!

In the case of Ballim v Bausch Lomb Canada Inc. 2016 ONSC 6307, the Employee had worked 13.5 weeks in what she thought was a one-year contract.

The issue the Judge had to determine was whether the employer and employee agreed to either a fixed term or indefinite term contract.  The method and wording used in the contract and during the negotiations were key factors in the judgment.

For this case, the Employer sent an email to the prospective Employee and specifically wrote: “this is a one year contract”.

However, the offer letter that was sent along with that email stated that the employment was on a contract basis but did not mention anything about a one year duration.  The offer did say that the Employee would be paid in 26 bi-weekly payments, which was equal to one year.  Also, there was no “entire agreement” clause (something we always ensure Dentists include in their contracts).

Ultimately, this matter went to a trial in front of a judge,  The Employer tried to argue that the offer letter included all the terms of the contract between the Employer and Employee.  So, since no duration was specified in the offer letter, the contract had to be an indefinite term.

The Employer was wrong.

The judge ultimately found that the offer email formed part of the employment contract and that the Plaintiff was entitled to be paid for the entire year of the contract, regardless if she was terminated before the end of the contract.  That was an additional 38.5 weeks paid to the Employee.

The takeaway for employers here is to (1) always get legal advice before, during, and after an Employee’s employment; and (2) beware that if you hire an employee for a specific period of time, make sure the contract (and any other correspondence to the employee) is clear and unambiguous with regards to the duration and termination.  Otherwise you may be responsible to pay the Employee for the entire term, regardless of when you want to terminate them

DMC