In Roberts v Zoomermedia Ltd ( 2016 ONSC 1567) the executive employee had a fixed term contract ending Oct 31, 2011 which provided for a lump sum payment of two years salary plus a 6 month paid sabbatical leave if either the employee was terminated before the end of the term or if the term expired. The term expired and the employee stayed on as an employee until terminated by the employer in March of 2012 when he was given working notice of termination of 6 months notice plus 2 months severance.
The Employee took the position that as the term of his employment contract had expired on October 31. 2011, he was entitled to his contractual severance payment of 2 years plus the 6 month paid sabbatical even though he continued on in his employment for another 4 months.
Mr Justice Perell agreed with the plaintiff. The judge treated the employment as being divided into two periods; the period covered by the term certain contract and the period after the term had expired. After the expiry of the term the employee was under the doctrine of reasonable notice, which the plaintiff did not pursue.
Thus the employee was paid severance pay even though his employment had not ended. Great deal if you can get it.
This was a very unusual termination clause. One wonders why they bothered to make it a term certain contract with an express end date. If the purpose of the termination cause is to agree what the employee will receive in the event his employment ends without just cause, then you are better off not making a term certain contract and just keep it a term of indefinite duration.
I find that employment contracts drafted by corporate lawyers often having a definite end date, even when the contracting parties have no business need for such a term. Worse, these clauses can be misleading to the employee who mistakingly believes that he has a guaranteed 2 year contract, only to find that a later provision in the contract allows the employer to terminate the contract prior to its term upon one month notice.
I used to tell clients that the term of their contract is equal to the shortest amount of time in which one party can lawfully terminate the relationship.
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