Employment / Labour Law
Employment Contracts

There was a time that employment contract was being treated as a business agreement between employers and employees. It is no longer the case. In fact, an employment contract nowadays is the most complex piece of document that an employer will ever draft of which the enforceability of any term that attempts to limit an employee’s entitlement to the Employment Standards Act (ESA) minimum standard is highly questionable.

An employment contract is a contract that requires offer, mutual agreement, consideration and acceptance. If an employer has acted in a way that forms an expectation, even if it’s more than the ESA minimum standards requires, the employer is estopped from not honouring such expectation if the employee has relied on it to his/her detriment. In another word, an employer cannot change the contractual terms of the employment contract unilaterally without valuable consideration in exchange.

A restrictive covenant such as non-competition clause or non-solicitation clause that stipulates that a worker is not allowed to compete against employer is only enforceable if it is limited in scope and duration. If the scope is overboard or the duration is too long, it will not be enforceable.

The current legal position on the issue of just cause is that except in truly egregious cases, a Court will rarely find just cause. A few words about just cause:


  1. Dismissal for cause on the bases of poor job performance absent other misconduct is unlikely to be upheld by the court.

  2. Employers who are getting “mean and cheap” and are found to allege dismissal for cause simply to avoid cost on a without cause dismissal may end up paying those costs plus aggravated and punitive damage.

  3. Dismissal for cause as a result of misconduct including criminal charges outside of the workplace unrelated to the employment relationship is a dangerous ground for employers, as such dismissal might not be warranted.


Even if a termination clause for termination without cause exists in an employment contract, unless the termination clause specifically stated that the common law reasonable notice is to be excluded, otherwise it does not preclude the application of the common law “reasonable notice”.

A termination clause that specify the notice required for a without cost situation may not be enforceable if it specifically stipulated that severance, and other employee benefits are to be included in the “in lieu of notice” payment, as it has the potential of render a termination below the “minimum guarantee” of ESA. The termination clause is not enforceable if it is ambiguous and unclear as to whether the minimum ESA standard has been met.

It's substance over form and a lot of legal issues are involved, and drafting enforceable contractual terms in an employment contract is becoming more of an art than a science. If you are an employer, you are well advise to retain a legal lawyer to draft a legally enforceable employment contract. if you are an employee, you are well advise to seek legal advice before accepting any "severance package" or "termination package".

HTW Law can help. Call us now at 647-849-6582 or send us a message if you have some legal questions / inquiries or want to schedule an appointment with HTW Law.

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