Starting a new job can be an exciting time for both employees and employers. One must be careful though not to let the excitement of a new opportunity cloud the potential legal issues that come with signing a written employment contract.  In the same way as a pre-nuptial agreement or a will, a well-drafted employment contract can provide certainty for both parties and avoid costly litigation. As an employee, you may feel obligated to sign whatever employment contract your new boss hands you.  However, these agreements often contain clauses that are very beneficial to the employer.  Though it may seem counter-intuitive, the beginning of the employment relationship might be the best time for an employee to exercise their leverage to improve the contract. One area to pay particular attention to is the termination clause of the contract. Nearly all employment contracts contain a provision allowing an employer to terminate an employee without cause. This usually just means that your employer can fire you for whatever reason so long as they provide you with notice or payment-in-lieu of notice for the period of time stipulated in the agreement. It is in the employer’s interest that a termination clause stipulate the minimum notice periods as set out in The Saskatchewan Employment Act.  The reason for this is simple: employers want to limit their financial obligations on termination and avoid paying reasonable notice at common-law. Section 2-60(1) of the Act stipulates the minimum notice as  

      Reasonable notice at common law often provides a substantially longer period of notice than the minimums set out above.  If your contract does not contain a termination clause and you are not terminated for “just cause”, then you are likely entitled to reasonable notice at common law. The Supreme Court of Canada has developed four non-exhaustive factors (commonly known as the Bardal factors) in determining what reasonable notice is.  These factors are:

Your Age; Your Length of Service to the Employer; The Character of Your Employment; and The availability of Similar Employment.

The amount of reasonable notice a judge may order is extremely fact-dependent. Some employment lawyers and employers have traditionally applied a “rule of thumb” of one month notice per year of service. Even though this approach has been rejected by the Saskatchewan Court of Appeal, many employment contracts still contain notice provisions based either on this rule or on the statutory minimum.  In general, employees who are eligible for reasonable notice at common-law are usually entitled to significantly more notice than the minimums set out in provincial employment legislation or in some employment contracts. For employees, it is therefore particularly important to pay attention to any termination clause in order to understand your rights in case your employment relationship ends. For employers, termination clauses must provide for at least the minimum amount of notice set out above.  If a contract does not meet the statutory minimums, case law suggests that a judge will likely find that an employee is entitled to reasonable notice based on the Bardal factors.

About the author: Andrew is an associate in the Saskatoon office and practices in a broad range of areas. His interests are currently focused on real estate, general civil litigation, insurance, and labour law matters.

About McKercher LLP: McKercher LLP is one of Saskatchewan’s oldest, largest law firms with offices in Saskatoon and Regina. Our deep roots and client-first philosophy have made us a top ranked firm by Canadian Lawyer magazine (2011, 2013). Expertise, experience and capacity provide innovative solutions for our clients’ diverse legal issues and complex business transactions. This post is for information purposes only and should not be taken as legal opinions on any specific facts or circumstances.  Counsel should be consulted concerning your own situation and any specific legal questions you may have.