3 Year Contract Paid Out

Paying out Fixed-Term Contracts

As we explored in greater detail in our blog about fixed vs. indefinite term contracts, when an employee on a fixed-term contract is terminated before the duration of the contract is complete, they are owed their wages for the balance of the contract unless the contract contains an enforceable early termination clause.

Courts are generally quite strict in upholding this principle. The recent case of Alsip v Top Rollshutters Inc. shows just how generously the courts may enforce a fixed-term contract in the employee’s favour.

Alsip v. Top Rollshutters Inc.

Mr. Alsip was offered a full-time, permanent position as a sales director at Top Rollshutters. However, instead of accepting the offer, he asked for an increase to his salary and a fixed-term contract of three years. Rollshutters agreed to Mr. Alsip’s request and presented him with an updated employment contract that read: “the position is full-time and permanent. Your compensation will be as follows: a three-year employment contract.”

After eight months with Rollshutters, Mr. Alsip was terminated without cause. He was given two weeks’ notice and offered an additional six weeks’ notice in exchange for signing a release of claims. In response, Mr. Alsip sued for wrongful dismissal.

The question at hand was whether or not Mr. Alsip was entitled to the balance of his three-year contract – as is normally the case when a fixed-term contract is ended prematurely – or simply to reasonable notice as the company had offered him.

While Mr. Alsip’s employer insisted that the contract had meant Mr. Alsip was guaranteed up to three years’ employment that could be terminated earlier with reasonable notice, the court upheld the language of the contract to its fixed-term meaning. The court awarded damages for the 28 months remaining in Mr. Alsip’s contract – an amount in excess of $140,000.

Takeaway for Employers

The decision in Alsip v. Top Rollshutters Inc. is a reminder that courts will generally read ambiguity in an employment contract in the favour of the employee. Ambiguity is rarely interpreted in favour of the person writing the contract as it is understood that they were in a position to draft whatever language and conditions they wished, including an early termination clause.

Be sure to include a clear and unambiguous early termination clause in your fixed term employment contract if you wish to have the option going forward to terminate the employee without having to pay them the balance of their contract.

The employment law team at KCY at LAW can draft clear, comprehensive and enforceable fixed-term contracts to fit any employer’s need. Call us today 905-639-0999 or connect with us online by filling out a consultation request form.

Retracting a Resignation

It was the heat of the moment. Things were just not going right at work and you felt like you just couldn’t take it any more and so, on an impulse, you said ‘I quit.’

At first it felt great. It was like a scene out of a movie. But then you got home. Your emotions began to cool down and reality started to settle in. You still have bills coming due and you won’t be able to count on a severance cheque to pay them. You have no job lined up and you realize the job you just quit really wasn’t all that bad. Maybe quitting wasn’t the best idea. Now what?

Can you retract a resignation?

Once you’ve quit your job is it possible to take it back? Can you ever rescind a resignation? Fortunately, sometimes the answer is yes.

Your ability to retract a resignation will depend primarily on the circumstances at the time of your resignation and how quickly you attempt to rescind your resignation.

If you have a change of heart about resigning from your job, the sooner you let your employer know that you have made a mistake and would like to keep your job, the greater the chance you will be able to successfully retract your resignation.

Factors impacting your ability to retract a resignation

Courts are sensitive to the circumstances surrounding a resignation. They understand that people can sometimes act irrationally when emotions run high and they therefore take a contextual approach when deciding if a resignation can be retracted. Given the vulnerability of unemployment, they often rule in favour of the employee.

Generally speaking, there are three factors that impact whether or not you will be able retract your resignation:

1. Clear and unequivocal intent to resign

Did your actions and words clearly indicate that you wanted to resign? Your ability to retract a resignation will depend largely on the circumstances at the time of your resignation and at the time you attempt to rescind your resignation. If you have resigned in a clear an unequivocal manner, you may still be able to rescind your resignation, but you’ll have to act fast.

2. Whether your employer has been affected to their detriment

Have they invested time or resources into hiring someone new or managing your absence? Your best bet is to rescind it before your employer expressly accepts your resignation. If your employer has already accepted your resignation, the chances of you being able to successfully rescind it will have diminished. However, you may still be able to take it back if your employer has not yet relied on your resignation to their detriment. This means they haven’t taken actions like starting the hiring process or rearranging resources to compensate for your departure.

3. Compromising circumstances
Was your resignation given with a clear mind or under the influence of emotional stress?

If things are heated, take a little time to cool off and reconsider with a clear mind before offering your resignation. If you are sure about resigning, put it in clear writing. If you have submitted your resignation but wish to rescind it, timing is key and you will need to tell your employer as soon as possible.

Takeaway for employees

In short, courts will consider whether a reasonable person, viewing the situation objectively, would have understood the employee to have resigned. In short, was it clear that the employee meant it when they resigned or were there extenuating circumstances that may have led to their decision.

For more information about retracting a resignation, contact KCY at LAW today to book your consultation at 905-639-0999 or connect with us online by filling out a consultation request form.

Severance vs. Termination Pay: What’s the Difference Anyway?

Though sometimes used interchangeably, termination pay and severance pay are not the same thing. While all employees of three months or longer with a company are entitled to termination pay (in place of notice) upon dismissal, not everyone is entitled to severance pay. To clarify the difference between the two, we’ve prepared a handy refresher for you.

What Is Termination Pay?

Termination pay is, quite simply, pay that is given in place of required notice of termination. Normally, an employee who is terminated without cause is entitled to either a statutory period of notice during which they continue working and receiving pay and benefits,  or they are entitled to pay in place of said notice. The amount of notice to which an employee is entitled will likely be set out in their employment contract, otherwise they are entitled to certain minimum standards guaranteed under the Employment Standards Act (ESA).

Required Notice for Termination in the ESA

The length of notice to which employees are entitled depends on how long they have been working with a company. The ESA guarantees the following notice durations or pay in lieu thereof:

Duration of Employment Notice or Pay-in-lieu Entitlement
3 months to less than a year 1 week
1 – 2 years 2 weeks
3 years 3 weeks
4 years 4 weeks
5 years 5 weeks
6 years 6 weeks
7 years 7 weeks
8 or more years 8 weeks

For example, If you worked for 4 years and 6 months at a company with a weekly pay of $1,000 and were terminated without cause, you would receive either four weeks’ notice or $4,000 (4 x $1,000) upon termination.

What Is Severance Pay?

As mentioned above, not everyone is entitled to severance pay. Severance pay is considered an earned benefit for long-serving employees. Or, as the Ontario Ministry of Labour puts it, severance pay “compensates an employee for loss of seniority and the value of firm-specific skills, and recognizes his or her long services.”

Additionally, to qualify for severance pay you must have worked for a company with a total annual payroll of $2.5 million or more for at least five years.

Severance pay is calculated differently from termination pay. To determine severance pay, you must multiply your regular week’s wages by your number of years of employment with the company.

For example, if you worked 7 years and 6 months (with a qualifying company) at a regular weekly pay of $1,000, your severance pay would be $7,500 ($1000 x 7.5).

Severance and Termination Pay Entitlements Lawyers

Consulting with an experienced employment lawyer is the best way for you to determine your full severance and termination pay entitlements. KCY at LAW have the expertise to ensure you your full entitlements under the ESA and your employment contract. Reach us at 905-639-0999 or contact us to book your consultation.