Under Ontario law, a wrongfully dismissed fixed-term employee doesn't have to mitigate
An Ontario-based company fired an engineer 21 months into his job, paid him two weeks' statutory severance, and considered the matter closed. The British Columbia Court of Appeal, in a decision dated March 5, 2026, authored by Justice Riley, thought otherwise.
The court dismissed both parties' appeals, upholding a trial order requiring full salary to be paid out for the balance of a three-year fixed-term contract, with no deduction for income earned elsewhere.
The reason: a superseding clause in a separate commercial agreement had silently overridden the employment contract's termination clause.
The deal that swallowed the termination clause
In 2018, Facility Condition Assessment Portfolio Experts Ontario Ltd. (FCAPX) purchased engineer Joseph Bouchard's business for $120,000. Three interrelated contracts were signed: an Asset Purchase Agreement, a Non-Solicitation and Confidentiality Agreement, and an Employment Contract. Bouchard joined as Project Engineer at $91,000 per year.
The Asset Purchase Agreement stated that Bouchard "agrees to enter into an employment contract which shall be for no less than 3 years on terms agreeable to both the parties." The Employment Contract separately permitted termination without cause on statutory notice. Schedule A stipulated the Asset Purchase Agreement's terms would "supersede" any related clause in the Employment Contract.
Twenty-one months in, the relationship soured. FCAPX terminated Bouchard without cause, paid two weeks' salary under the Employment Standards Act, and withheld the final $5,000 installment of the asset purchase price. Bouchard sued for wrongful termination. FCAPX countersued for breach of the non-compete covenant and alleged conversion in relation to documents it claimed Bouchard had failed to transfer as part of the asset purchase.
What the courts found, and what it costs
Both the trial court and the Court of Appeal found the three-year minimum in the Asset Purchase Agreement superseded the Employment Contract's termination provisions. The contracts provided that Ontario law governed.
Under Ontario law, the governing principle from Howard v. Benson Group Inc. is that "appropriate damages for breach of a fixed term contract is a pay out of the remainder of the fixed term, with no obligation on the employee to mitigate their damages." Every dollar Bouchard earned elsewhere during those months counted for nothing against FCAPX's liability.
The court also upheld the finding that FCAPX's failure to pay the final $5,000 installment was a breach of the Asset Purchase Agreement, ordering payment with contractual interest at 6.5%.
The non-compete that cut both ways
Bouchard was not without liability. After termination, he performed engineering work for three former FCAPX clients in breach of his non-compete covenant. The court upheld damages of $20,692.18, calculated from $29,560.25 in lost revenues minus a 30% expense margin.
The court noted the tension in FCAPX's dual position: it argued for a mitigation deduction on Bouchard's wrongful dismissal damages while simultaneously enforcing a non-compete that barred him from using his professional skills to earn income.
The trial court's finding, upheld on appeal, frames the case's core lesson for HR: "In this case the reasonable expectations of the parties, construed objectively and given the context of the contract, was to have an employment arrangement which lasted at least three years."
