Ensuring termination clauses remain valid in fixed employment contracts (Toughest HR Question)

Employers can often avoid litigation by using indefinite term contracts
By Colin Gibson
|Canadian HR Reporter|Last Updated: 03/12/2014

QUESTION: If a one-year, fixed-term employment contract with a specified end date and a termination clause is renewed annually without any changes, does the termination clause remain valid?

ANSWER: Under common law, an employment contract is presumed to be of indefinite duration and subject to an implied term requiring the employer to give reasonable notice if it wants to dismiss the employee without cause.

However, the parties to an employment relationship can create a written contract that contains different provisions. For example, an employer and employee can agree to an express termination clause in the employment contract, as long as the clause meets or exceeds the employee’s termination entitlement under the applicable employment standards legislation.