Contract was for two years but no breach for early end

Security firm could invoke termination provision

Is the job you’re offering open-ended in duration, or is it for a fixed length of time? Being clear about this in employment contracts can save you money when it comes to a parting of the ways.

Tolsec Canada recently saved significant notice damages by proving that its employment contract with Joseph Sullivan was not for a definite term.

Through his company, Lockport Security, Sullivan competed with Tolsec, installing and monitoring alarm systems. Tolsec purchased Lockport, with the buy-out agreement stipulating that Tolsec would hire Sullivan as sales manager for two years.

The agreement also said that Sullivan’s employment contract could be automatically renewed for an additional year. But it permitted termination at any time with the minimum employment standards notice.

This became particularly important, as the employment contract stipulated that the agreement on minimum notice was a material inducement for Tolsec to hire Sullivan.

About a year after the agreement came into force, Chubb Security Canada purchased Tolsec and gave Sullivan a month’s termination notice. Sullivan refused to accept this, claiming that the employment agreement was for a fixed term of three years, which entitled him to notice pay for that entire period.

Alternatively, he argued that the employment agreement was void because, by stipulating a minimum six-month employment period before the termination provisions applied, the agreement violated the British Columbia Employment Standards Act.

It is a given of employment standards law, of course, that you cannot contract out of the minimums established by the legislation.

The British Columbia Supreme Court has sided with Tolsec and its president.

It has ruled that section 65(1)(b) of the act removes employees’ entitlement to compensation for length of service at the end of a definite term of employment.

In any event, in its termination provisions, the parties’ agreement in this case qualified the potential for a three-year term of employment, the court has said.

The six-month minimum service requirement violated the Employment Standards Act, all right, but the balance of the agreement stood.

It remained the case, the court says, that the parties did not intend to provide Sullivan with employment for a definite term of three years.

For more information:

Sullivan v. Graydon, 2000 BCSC 999, Vancouver registry no. C980920, June 27/00.

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