One Year Fixed Term Contract Means What it Says :

n Elder v. Max Wright Real Estate 2023 ONSC 5661 , Justice Koehnen had a situation where a real estate agent had a one year fixed term contract will an automatic renewal clause .

It also had the following clauses :

1. In the event the Contractor violates this Agreement or otherwise fails to conduct his/her business in accordance with the terms of this Agreement, the Company may terminate this Agreement immediately and without notice.

2. Either party may terminate this Agreement, without cause, at any time with written notice to the other party.

The Defendant argued that , in reliance on section 2 above, that they could terminate the contract without cause without any notice, reasonable or otherwise, notwithstanding the one year fixed term .

This is what the judge said :

I nevertheless conclude that the concept of notice even in clause Q 2 must refer to the period of advance warning. If it were otherwise, it would render the inclusion of a one-year renewable term in clauses A 1 and A 3 superfluous and would in fact negate the concept of a renewing one-year term. The concept of a one-year renewing term would be meaningless if either party could terminate the contract at will, at any time, without any advance warning. It is a well accepted canon of contractual interpretation that contracts should be read as a whole and should be read harmoniously so as to avoid conflict between terms and so as to avoid rendering any terms superfluous. The easy way of doing that here is to interpret the concept of “notice” in accordance with the well-established concept of common-law notice of termination in the sense of advance warning.

[22] In clause Q 2 the actual amount of notice is not referred to because it is not necessary to do so. The amount of notice required is the period of time remaining in the one-year term.

My Comment :

This decision is so obviously correct.

According to the Defendants’ interpretation, the whole contract was at will . Why then have a fixed term? Why then have a with cause clause?

It is great to see that sometimes common sense prevails, even in law.

The judge found that because the plaintiff was not an employee but a contractor , the plaintiff  had a duty to mitigate and and such his damages were reduced by the income he earned from new employment during the balance of the 11 months in the fixed term contract.

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CIRB Rules That to be a Dependant Contractor under the CLC the Person Must Derive at Least 50% of their Income From the One Source:

In Gee v Corus Entertainment ( 2023 CIRB 1090) Adjudicator Rogers ruled that an regular guest on air contributor who appeared twice a week was not an employee and thus not covered by the Unjust Dismissal section of the Canada Labour Code.

The CLC also covers Dependant Contractors, however this is what the Adjudicator said on this point :

[22] Turning to the question of whether the complainant meets the test for a dependent contractor, the Board finds that the undisputed facts establish that she was not economically dependent on Corus. Rather, the uncontested facts are that she worked for various other media outlets throughout her tenure with the employer and that only 25 per cent of her income was from Corus.

This is well below the near-exclusivity threshold of at least 50 per cent as contemplated in the above-noted cases.

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Failure to Prove Just Cause Does Not Invalidate Valid Termination Clause :

In Pirani v CIBC ( 2023 ONSC 5991) Justice Ramsay dealt with the issue where an employer alleges just cause but fails to prove this at trial , does that mean that the contract has been repudiated by the employer and therefore they are barred from relying of the without cause provision of the contract ?

This is what the judge said :

[176] Ms. Pirani argued at trial that the employment agreement was repudiated when she was dismissed for cause and, in the result, the CIBC cannot rely on the termination provision. Ms. Pirani does not plead repudiation in her statement of claim. Ms. Pirani bears the onus of establishing that the employment agreement was repudiated: Humphrey v. Mene, 2021 ONSC 2539, at para. 116. An employer’s failure to establish just cause does not disentitle an employer from enforcing an otherwise valid without cause termination provision: Humphrey, at para. 135.

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This Case Covers Almost Everything You Need To Know About Wrongful Dismissal:

In  Jimmy How Tein Fat v. PRGX Canada Corp., 2023 ONSC 6374, Justice Callaghan ruled on many issues that commonly  arise in wrongful dismissal actions and therefore provides a useful guide to the leading cases and what they stand for.

Summary Judgement :

I find this case is appropriately resolved by summary judgement. There are no factual issues that would be assisted by a trial and there were no submissions by either counsel that a trial would assist in my fact finding. The parties state that they have called all the evidence they intend to call. As can be seen from the decision below, there were no credibility issues that were required to be resolved. The dispute here is largely how the law is to be applied to the facts and any inferences drawn from those facts. I am satisfied that I am able to apply the facts to the law. As a result, there is no genuine issue that requires a trial and there is no benefit to requiring the parties to endure the delays and costs of a trial. I am satisfied that I can reach a fair and just resolution of the matters in dispute based on the record before me.


Reasonable Notice :

[20] Based on the factors above and having reviewed the multitude of case law that has been presented to me, I find that a 24 month notice period is warranted. Mr. How was a loyal employee for 29 years. He is (as one judge referred to it) “in the twilight of his career” at the age of 63 which makes finding replacement employment harder. He was a senior executive in a niche industry who was paid a significant sum. At his age, his prospects of obtaining another employment opportunity commensurate with the seniority and remuneration with what he had at PGRX is understandably dim. As articulated to by Chief Justice McRuer, setting any notice period is inherently a fact driven exercise. Nonetheless the bulk of the case law presented to me, particularly in the appended charts filed with the plaintiff’s factum, support my conclusion of a 24 months notice period. 

Calculation of Base Salary:

[26] Mr. How received merit increases most years. In his 2021 notice, he was advised that his base salary was $413,753.60. This salary number does not require any deductions, in contrast to the method proposed by the defendant. I am satisfied that in calculating the salary over the 24 months, that $413,753.60 per annum is the correct amount. 

[27] In addition, I disagree with the defendant’s calculation of a four-year average. Historically, in most years, Mr. How’s base salary increased. There is no evidence to suggest that his salary would go down during the notice period. In such circumstances, taking a four-year average would unnecessarily reduce the salary component of his damages for the notice period. As a result, I accept that the proper calculation of damages for Mr. How’s loss of salary over the 24 months is $827,507.20. 


[38] In looking at the entitlement of a bonus, Matthews requires me to answer two questions: (1) would the employee have been entitled to the bonus or benefit as part of their compensation during the reasonable notice period? and (2) if so, do the terms of the employment contract or bonus plan unambiguously take away or limit that common law right?

[40] The Supreme Court held that this provision was not sufficient to oust the common law right to damages. Phrases requiring an employee to be “full-time” or “active” were also not sufficient to remove an employee’s common law right to damages. The reason for this was stated by Justice Kaiser as follows: 

Yet, it bears repeating that, for the purpose of calculating wrongful dismissal damages, the employment contract is not treated as “terminated” until after the reasonable notice period expires. So, even if the clause had expressly referred to an unlawful termination, in my view, this too would not unambiguously alter the employee’s common law entitlement. 

[41] The terms of the PGRX’s plan do not, in my view, exclude Mr. How’s entitlement to a bonus during the notice period. For purposes of compensation in lieu of notice he “is employed” and his employment is not at an “end”. Rather, he is to be treated as an employee during the notice period and that includes payment of the bonus. 


[45] However, the onus is on the defendant to establish that the dismissed employee both failed i) to take reasonable steps to search for a job and ii) that a job comparable to the job lost by the employee could have been found. As stated by the Supreme Court of Canada in Evans v. Teamsters Local Union No. 31, 2008 SCC 20 (CanLII), [2008] 1 SCR 661, at para 30: 

This Court has held that the employer bears the onus of demonstrating both that an employee has failed to make reasonable efforts to find work and that work could have been found (Red Deer College v. Michaels, 1975 CanLII 15 (SCC), [1976] 2 S.C.R. 324).

[56] Ultimately, mitigation is a two-part test. The second part of the test requires PGRX to establish that Mr. How could have found comparable employment. As stated in Lake the issue is “whether the [the employer ] had proven that, if reasonable steps in mitigation had been taken by the [employee], she would have found a comparable position during the reasonable notice period” (at para 34). PGRX has led no evidence that a comparable job was available with any of the competitors at any time since Mr. How’s termination. PGRX clearly knows the players in the industry and, if comparable jobs were available in the industry, that evidence could have been called. Moreover, there was no evidence adduced by PGRX of any comparable jobs suitable for Mr. How since his termination. The onus was on PGRX to establish both prongs of the test. Regardless of whether Mr. How acted reasonably or not at the outset of his search, the defendant has failed to establish that he could have obtained a comparable job had he conducted the search as proposed by PGRX. 

[57] I do not find that PGRX has met the onus of establishing that Mr. How failed to mitigate his losses. 

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Employee Gets One Month Covid Bump Plus $30K in Punitive Damages:

In Chalmers v Airways Transit Service and Bladder Capital Group, 2023 ONSC 57825 Justice MacNeil first awarded 24 months notice to a 53 year old VP with 28 years service and then  added a one month COVID bump because he was terminated in June 2020 at a time when the airline industry was in the dumps.

The Defendant tried to rely on the old IDEL defence, which had been knocked down already in a string of Ontario cases. It was defeated again.

The Defendant also tried to get the CEWS deduction, another defence that had been previously knocked down . Again they failed.

Some people never give up.

Then the Defendant got whacked for $30,000 in punitive damages. This is what the Judge said on that issue :

159]           In my view, by the manner in which it treated Mr. Chalmers, Airways Transit engaged in sufficiently harsh and outrageous conduct that it merits a punitive damages award, including the following grounds:

(a)     When initially laid off, Mr. Chalmers was asked to work without pay.

(b)     In or about June 2020, Airways Transit had recalled several senior managers but not Mr. Chalmers.

(c)     Airways Transit contacted Mr. Chalmers in the months subsequent to his layoff to ask questions regarding operations, procedures, contacts and staffing matters. He was also asked to provide passwords. I find that this conduct was an obvious attempt by Airways Transit to phase Mr. Chalmers out of his role as Vice-President.

(d)     Mr. Chalmers followed up with Airways Transit multiple times about returning to work and Airways Transit failed to respond to his inquiries.

(e)     Airways Transit refused to pay Mr. Chalmers his outstanding vacation pay in contravention of the ESA.

(f)      Airways Transit failed to make contribution to Mr. Chalmers’ RRSP plan.

(g)     As of the motion hearing date, Airways Transit had not paid Mr. Chalmers his statutory entitlements pursuant to the ESA.

(h)     Despite attempts by Mr. Chalmers to return Airways Transit’s property, Airways Transit pled that he had failed to return said property and threatened “recovery” of damages for same.

(i)      Airways Transit’s conduct, including its silence and failure to provide relevant information in a timely manner, severely harmed Mr. Chalmers’ ability to make informed decisions concerning his employment and career.

(j)      By its actions, Airways Transit also failed to assist Mr. Chalmers with a new job search or to give him a letter of reference.

[160]           Employees depend on employment not only for their financial survival but also for a sense of self-worth. Conduct of the employer that negatively impacts on those two essential elements warrants condemnation and punishment.

My Comments :

The ability of Courts to punish employers who act unfairly when terminating employees has had many names over my career ( Mental Distress, Honda Damages , Moral Damages, Aggravated Damages, Punitive Damages) but they all have the same theme.

If you treat people like dirt when terminating them, we will punish you.

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One Day Trial Results in Judgement of $45,000 and $54,000 in Costs :

In Giduturi v LG Electronics Canada Inc., ( No citation yet) Justice Dineen had a situation where the Plaintiff made three valid Rule 49 offers , all of which the Defendant rejected.

The Judge then awarded the Plaintiff 12 months notice ( $45,000) and substantial costs of $45,000 plus HST and disbursements, which came to $54,687.

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