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Posts tagged: Fixed-Term Contract

Damages Owed Under Fixed Term Contracts

By , November 28, 2017 12:32 pm

In my last blog post, I discussed a case where an independent contractor who signed a fixed term contract was owed notice of termination, specifically, 5 months and 3 weeks. There are very important differences between indefinite and fixed term contracts, particularly at the time of termination. In this week’s blog post, I’ll delve deeper into how damages are calculated when you are subject to a fixed term contract.

 

Mohamed v Information Systems Architects Inc.

Facts

Mr. Mohamed was hired as an independent contractor for Information Systems Architects Inc. (ISA) to provide technological services for their client, Canadian Tire, for a 2 month project. After signing a consulting agreement, he began to perform computer security services for Canadian Tire.

Around this time, Canadian Tire retained ISA for a second project which required a security engineer to temporarily fill a position for six months. ISA offered the project to Mr. Mohamed, which he accepted by signing a second consulting agreement.

Due to the results of Mr. Mohamed’s security background check, which disclosed a past conviction, Canadian Tire asked ISA to replace Mr. Mohamed. ISA terminated Mr. Mohamed, relying on the termination clauses found in the consulting agreement.

Decision

The court moved on to note that nothing turned on whether Mr. Mohamed was an independent or dependent contractor. Whether Mr. Mohamed was an employee, a dependent contractor, or an independent contractor would have been relevant if the employment contract was of indefinite duration, i.e. one in which a person is entitled to reasonable notice of termination unless the parties have contracted otherwise.

With a fixed term contract, such as the one Mr. Mohamed signed, if the parties do not specify a pre-determined notice period, then the early-terminated employee is entitled to the compensation they would have received until the end of the fixed term. As I discussed in my last blog post, the court found that the termination clauses were unenforceable. Therefore, Mr. Mohamed was entitled to damages equivalent to 5 months and 3 weeks of the remaining contract.

Lessons to be Learned

Although independent contractors don’t enjoy protections under the Employment Standards Act, notice of termination may still be required. If you were characterised as an independent contractor and were terminated without notice, it is still advisable to speak to an employment lawyer to ensure that a) you are in fact an independent contractor, and b) you are not owed notice of termination, particularly if you signed a fixed term contract. 

“The material and information in this post are for general information only. They should not be relied on as legal advice or opinion. The author makes no claims, promises, or guarantees about the accuracy, completeness, or adequacy of any information referred to in this post or its links. No person should act or refrain from acting in reliance on any information found in this post. 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 the author or the MacLeod Law Firm.”

Terminated Contract Employee Receives Three Years’ Pay from Prior Employer

By , September 6, 2016 10:30 am

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.

Lessons

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 provided on this blog and this website are for general information only and should not, in any respect, 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 linked or referred to or contained herein. No person should act or refrain from acting in reliance on any information found on this website or blog, without first retaining counsel and obtaining appropriate professional advice from a lawyer duly licensed to practice law in the relevant jurisdiction. These materials do not constitute legal advice and do not create a lawyer-client relationship between you and any of the authors or the MacLeod Law Firm.”

Fixed-term Contracts: What Happens When They End?

By , January 13, 2015 10:43 am

 In a recent decision, an employee attempted to prove that he had a five-year fixed term contract with his employer.  While the court ultimately found that he did not, the decision highlights the important differences between indefinite and fixed-term contracts. These differences are especially significant to you as an employee if you are terminated.

Indefinite Contracts

In a typical contract, the term of employment is indefinite – there is no end-date to your employment.  If the employment contract does not contain an enforceable termination clause, then you are entitled to reasonable notice of termination or pay in lieu of notice if your employer terminates your employment. How much notice you are entitled to depends on, among other things, your age, position, education and experience, and length of service with the company.  Trial judges rarely find a notice period more than 24 months.

Fixed-term Contracts

 A fixed-term contract states that an individual will be employed for a specified period of time – such as one year.  These contracts are common when employees are filling maternity leaves, time limited projects, and/or for government funded positions.  The difference between a fixed-term contract and an indefinite contract at the time of termination is significant. An employee with a fixed-term contract should be paid the entirety of what she would have received under the contract, should the employment end early.

Take the case mentioned above as an example.  The employee argued that he had a five year fixed-term contract.  He was terminated after eight months. If the court had found that he did have a fixed-term contract, he would have been entitled to damages in the amount of four years and four months of wages.

As another example, if an employee is filling a maternity leave and has a fixed-term contract for one year, and that employee is terminated after two months, she is entitled to payment of the remaining wages on the contract – ten months in this example.

 If there is a termination clause in an employment contract that will usually set how much notice an employee should receive.  This is true whether it is an indefinite or fixed-term contract.  Keep in mind that termination clauses can be attacked whether they are found in indefinite or fixed-term contracts. For more information on termination clauses, see here.

If you have lost your job and would like to know whether you are entitled to additional termination pay, please contact us at [email protected] or 1-888-640-1728 (toll free) or 647-204-8107 (within the GTA).

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