Termination and employment contracts: what you need to know

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Last week, HRM looked at some of the most common mistakes made in just cause termination, and Toronto employment lawyer Christine O’Donoghue suggested that in many cases it would be less costly and time-consuming to terminate without cause and pay the appropriate notice period.

O’Donoghue also warned HR practitioners to check their employees’ contracts before terminating them.

“An employment contract protects employers from paying above the statutory minimums,” O’Donoghue said. “If at the outset the employer has a contract that has a valid and enforceable termination without cause clause then the employer’s exposure is limited.”
Employees and their lawyers will look carefully for ways to attack the validity of those clauses so it’s important to get some legal assistance in drafting the clause in the first case and review the clauses in a yearly audit where you ask if the contract is still compliant with current laws.

For example, in one recent case, a termination clause made no mention of continuing benefits for the notice period so the court rejected the entire clause. Another found that while the individual terminated was given sufficient notice, there was one possible scenario where an employee could receive less than the statutory minimum, and therefore the entire clause was void. Whenever a decision like these builds on existing case law, it’s important to review the current employment contracts and update where necessary.
When making substantial changes to an employment contract, remember to consider its enforceability. Employees should not feel pressured to sign, and some employers even choose to offer incentives for the employee in exchange for signing an amended contract, O’Donoghue said.

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