Explicit Language Needed For Fixed-Term Contracts

Temporary work has become the new reality for many Canadians. According to StatCan, as of May 2014, 2.1 million individuals were employed in jobs with predetermined end dates. Since the recession, temporary employment has grown three times faster than permanent work.

Fixed-term work presents a whole different set of considerations than traditional permanent employment. In contrast to permanent employees, fixed-term employees are not protected by employment protection legislation and the common-law requirement of reasonable notice. Given the consequences to the employee, there must be unequivocal contractual language for a court to find that an employment contract is fixed- term. Any ambiguity in the contract will be interpreted against the employer so as to give the employee the benefit of reasonable notice or pay in lieu: Ceccol v. Ontario Gymnastic Federation, [2001] O.J. No. 3488 (C.A.).

Although employees on definite-term contracts are not entitled to reasonable notice, it does not mean that they are not entitled to any damages should their contracts be prematurely terminated without cause. The measure of damages is the value of salary and benefits that the employee would have received had he/she worked the remainder of the term: Canadian Ice Machine Co. v. Sinclair, [1955] S.C.R. 777.

It is well-settled that permanent employees must mitigate their losses by making reasonable efforts to seek alternate employment. The jurisprudence is not so clear, however, as to whether mitigation applies to fixed-term contracts.

There is a line of authorities, stemming from the 1955 case of Sinclair, which provides that a fixed-term worker is subject to a duty to mitigate if the contract is silent on the point. The plaintiff in Sinclair had been a general manager for the defendant company. When he was set to retire at 65, he entered into a seven-year contract with the company pursuant to which the company would pay him a salary to provide consulting services when called upon. Before the term ended, the company purported to terminate the contract with three months' pay in lieu of notice. The majority of the Supreme Court (Justices Kerwin, Estey, Kellock , and Cartwright), in two separate reasons, suggested that the plaintiff had to mitigate his loss, which he had done by holding himself available to work as a consultant.

Sinclair has spurred some courts to impose an obligation to mitigate. As crisply stated in Mosher v. Epic Energy Inc., 2001 BCCA 253...