Fixed-term contract outlasts services provided by consultant

You make the call

This instalment of You Make the Call features a dispute over the termination of a fixed-term contract.

In 2015, Martin Radikov signed a fixed-term contract with Premier Project Consultants (PPC), an information technology consulting firm in Kitchener, Ont., to provide consulting services. The contract was set to begin on May 6, 2015, to Nov. 6, 2015, and would pay Radikov $37,500 over the course of the contract. Radikov was to submit invoices every two weeks during the six months and PPC would pay the amount of each invoice.

While the term of the contract was to be six months, it also had an early termination provision that allowed either Radikov or PPC to terminate with two weeks’ advance written notice. In such circumstances, the provision stipulated that Radikov would receive “final and full compensation” for the time served under the contract up to the end of the biweekly invoice period in which the early termination date occurred — calculated as “37,500/26 x period worked.”

Radikov provided consulting services for about three months until mid-August, when the work from PPC dried up. Radikov emailed the president of PPC to ask about some projects and said “if you have decided that you do not need me anymore I would appreciate the heads up so I can start looking for work.”

PPC’s president responded by saying he wouldn’t stand in Radikov’s way if another opportunity came up and wished him “all the best in your future endeavours.” He recommended Radikov take a vacation and contact PPC when he was back. Radikov did so and started looking for other work in September.

Radikov contacted PPC on Oct. 2 to inquire about his status and the company said nothing had changed with regards to work for him. Two weeks later, Radikov emailed the company say that since he had three weeks until the end of his contract, he could come into the office and do general drafting work or else PPC could terminate the contract. PPC replied that there was still no work for him and he should look for other employment.

On Nov. 4, Radikov sent PPC invoices for all the biweekly pay periods from Aug. 15 to the end of his contract on Nov. 6. PPC responded by sending notice that the contract had been terminated for lack of work back in August — Radikov hadn’t performed any work for PPC since then.

Radikov filed a complaint for breach of contract, seeking payment for the balance of his contract from Aug. 15 to Nov. 6. PPC responded that Radikov provided no services after that date, so the contract was effectively terminated — the contract didn’t stipulate that payment still had to be made if no services were provided.


You Make the Call


Was the contract terminated early for lack of work? 


Was Radikov entitled to pay for the full six-month term of the contract?

If you said Radikov was entitled to be paid for the full six-month term of the contract, you’re right. Though PPC didn't assign any consulting work to Radikov after August 2015, it didn’t give him proper notice of termination of the contract until two days before its end date.

The court found that although Radikov didn’t provide any consulting services in the final three months of the contract and the contract didn’t address the issue of payment for no services provided, the contract also didn’t specifically state that Radikov would not be paid if he didn’t provide any services. The absence of any provision addressing the circumstances in which no services were provided could have been mitigated by the early termination clause, which gave either party the right to escape the contract with two weeks’ notice. If PPC had no more work for Radikov and didn’t want to pay him for the balance of the contract term, it could have availed itself of the escape clause, the court said.

The court also found that PPC’s suggestion that Radikov take a vacation in August and that it wouldn’t stand in his way if he sought other opportunities didn’t clearly terminate the contract. Radikov requested PPC let him know if it didn’t need him anymore, but PPC didn’t clearly state that at any point. In addition, PPC didn’t pay Radikov anything after Aug. 15, so if it had actually terminated the contract at that point, it owed him two weeks’ notice at that point and should have paid him for another biweekly pay period.

The court ordered PPC to pay Radikov damages for breach of contract plus his legal costs for a total award of $20,469.81. PPC appealed the decision but the appeal was dismissed.


For more information see:

Radikov v. Premier Project Consultants, 2017 CarswellOnt 21382 (Ont. Div. Ct.).

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