The current Covid-19 crisis has put a lot of scrutiny on contracts of employment as businesses and employers are rushing to determine their exposure and liability before making difficult decisions with their workforce.
Its during times like this, that businesses who invested a little bit upfront to ensure they had the right contracts and policies in place, are able to reap the reward of significant savings; while others, who either neglected this all together or took a short cut with boilerplate clauses, are finding they are exposed to significantly higher liability.
As an example, a good termination clause can make the difference between an employee being entitled to over 2 years of their salary upon the termination of their employment, versus 8 weeks.
Some Employers have a misapprehension that upon dismissal employees are only entitled to their statutory entitlements under the Ontario Employment Standards Act, 2000 (“ESA”) or, for federally regulated employees, the Canada Labour Code (“CLC”). These statutes only outline employees’ minimum entitlements under the law, failing to comply with which is illegal.
In reality, employees are, by default, entitled to reasonable notice under common law; this usually entitles them to much more than the statutory minimums.
In order to rebut the legal presumption that the employee will be provided with common law reasonable notice upon dismissal, the contract of employment must include a valid termination clause which replaces the common law notice with another period agreed by the parties and which complies with the ESA minimum.
In order to reduce the cost of terminating the employment of their employees, employers can proactively work with an employment lawyer to ensure the right clauses are in the contract of employment, including an enforceable termination clause. Failing to do so may be costly.
Yusuf Buttar is an employment and human rights lawyer.