The manner in which an employment contract is written and the language employer’s use to deal with employee terminations can help ease the uncertainty with respect to how much it will cost to terminate an employee. The Courts maintain a very strict standard when it comes to enforcing these clauses and when poorly drafted, the Courts will not hesitate to disregard it. Primarily, an employment contract should reflect current legislation and the minimum statutory entitlements.
Most employment contracts fail at the onset when the minimum statutory entitlements are not respected. In addition, the termination language needs to be such that it provides the employee with the minimum entitlement according to provincial or federal legislation. When this is not met, the Court will strike it down. To ensure that the termination language in an employment contract is written and enforceable follow these steps:
- Keep it simple: Set out the specific amount of notice and/or pay. A complex clause can run the risk of being invalid if there is more than one interpretation.
- Know your jurisdiction: Know the statute that applies. Some employers are provincially regulated, and some are federally regulated.
- Know the applicable minimum standards and how they apply: familiarity with this will help ensure that the clause is compliant at all times.
- Close the door on more damages: write the clause so that it does not permit an interpretation for additional payments.
- Recommend independent legal advice: include this in the contract, it will help defuse the argument that the person was forced to sign or that they didn’t understand what they were signing.