This instalment of You Make the Call features a contract that was terminated not long before its fixed term elapsed.
Martin Radikov signed a six-month consulting contract on May 6, 2015, with Premier Project Consultants, an engineering company based in Kitchener, Ont. The term of the contract was six months and Premier agreed to pay Radikov $37,500 plus HST, to be paid bi-weekly. Radikov was to work regular office hours at Premier’s offices and be supervised by Premier’s president.
The consulting agreement also had an early termination clause that allowed Premier to terminate it by providing Radikov “with two weeks advance written notice.”
Radikov worked regular hours for Premier for more than three months. At the end of July, he requested a two-week vacation to be taken from Sept. 16 to 30. Since the consulting agreement didn’t provide for any vacation, Radikov assumed his vacation, if granted, would be unpaid. Premier’s management verbally approved the request.
Two weeks after Radikov’s vacation request, on Aug. 14, he was called into a meeting with the president and other members of management. They told him the president was going to be away until Sept. 21, so he should take his vacation immediately. Radikov was confused, as there were three design projects underway at the time, including one that was urgent.
Three days later, Radikov emailed management asking about the “forced vacation.” Premier’s president responded by reiterating he would be out of the office until the week of Sept. 21 and he would reach out to partners in their projects for feedback. He also told Radikov “I would not stand in your way if another opportunity came up and would wish you all the best in your future endeavours.” The president concluded with a request that Radikov “touch base” when he returned and they would “assess the situation.”
Radikov took his vacation as originally planned on Sept. 16. After he returned on Oct. 2, he contacted Premier management about his status. He was told that “nothing has changed in regards to work available for you.”
Two weeks later Radikov inquired again and noted that his contract didn’t contain a provision for vacations and Premier could terminate it. Premier responded by saying there was no work for him and suggested he look for other work as there was no indication things were going to change.
Radikov proceeded to submit his last for invoices for the remainder of the six-month contract. Premier responded with the statement: “The contract was terminated as per the agreement so no additional monies are owing.”
You Make the Call
Did Premier owe Radikov payment for the balance of the six-month contract?
OR
Did the company terminate the contract according to the early termination clause?
If you said the company owed Radikov for the balance of the contract, you’re correct. The court found the contract gave Premier the option to terminate the contract early without cause by providing two weeks’ written notice, but Premier failed to give such notice.
The court also found that when Premier told Radikov to take his vacation early on Aug. 14, and then didn’t have any work for him after that, it was essentially a layoff. Since the contract didn’t provide for layoffs, Premier breached the contract, said the court.
“Premier could have given two weeks’ written notice of termination but for reasons unknown, did not do so,” said the court. “It cannot avail itself of a notice provision it did not invoke as written.”
The court also found there was nothing in the contract that relieved it of its obligation to pay Radikov for the balance of the contract`s term if there was insufficient work for him. Regardless of the circumstances, the only way the contract could be terminated early was to provide two weeks’ notice.
The court determined Premier breached the contract and was on the hook for the balance of the contract’s term. Premier was ordered to pay Radikov $15,798.71 plus interest, as well as a $4,500 representation fee.
“Premier played hardball with Mr. Radikov. It laid him off without terminating the contract, then claimed at almost the end of the fixed term that it had terminated the contract previously, then denied the termination in the pleading, and at one point proposed to allege in the alternative that it had terminated the contract for cause, then later abandoned that proposal,” the court said. “In my view Premier’s treatment of Mr. Radikov is anything but a model of good faith performance of contractual relations.”
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