In Howard v. Benson Group Inc. (The Benson Group Inc.), 2016 ONCA 256 (CanLII) there was written employment contract was for a five-year term, commencing September 2012 (the “Employment Contract”). His employer, the respondent Benson Group Inc., terminated the appellant’s employment, without alleging cause, 23 months later. The Appellant sought damages in the amount of the unexpired portion of the five-year term, a little more than 3 years, or about $180,000. Instead the summary motions judge awarded common law damages for wrongful dismissal. Not surprisingly, in the circumstances, he also found that there was a duty to mitigate.
The issue before the Ontario Court of Appeal was:
“[3] The primary question raised on appeal is whether an employee who is employed under a fixed term employment contract that does not provide for early termination without cause, is entitled to payment of the unexpired portion of the contract on early termination of the contract?”
In Howard, the written employment contract provided:
“Employment may be terminated at any time by the Employer and any amounts paid to the Employee shall be in accordance with the Employment Standards Act of Ontario.”
This provision was ambiguous. Thus, the Court noted:
“[11] The motion judge made two critical findings: (1) that the early termination clause is sufficiently ambiguous as to be unenforceable; and (2) that in the absence of an enforceable early termination clause, the respondent’s obligations are governed by “an implied term under the common law requiring ‘reasonable notice’ for the termination of the employment of the [appellant].” Only the latter finding is appealed.” [Emphasis added]
The Court concluded:
“[26] The Employment Contract, without Clause 8.1, unambiguously remains a fixed term contract. Without Clause 8.1, it contains no provision for early termination without cause. In keeping with Machtinger and Ceccol, the Employment Contract is sufficiently clear to oust the common law presumption of reasonable notice on termination. It follows that the appellant is entitled to the compensation that he would have earned to the end of the Employment Contract.”
In short, the summary motions judge erred in awarding common law wrongful dismissal damages. Moreover, in the absence of an enforceable contractual provision stipulating a fixed term of notice, or any other provision to the contrary, a fixed term employment contract obligates an employer to pay an employee to the end of the term, and that obligation will not be subject to mitigation.