A fixed term contract may require, in certain instances, a minimum notice obligation. This issue takes on added significance as the failure to adhere to the employment standards obligation may render the contract term unenforceable and expose the employer to a common law claim.

This is the exception to the usual rule as discussed above.

Statutory Requirement

Regulation 288/01 passed under the Ontario Employment Standards Act states that employees hired for a specific fixed period of time or a prescribed project are not entitled to notice of termination or severance.

A brief summary is that no statutory notice is required for a fixed term contract or fixed task provided that it is for a time period of 12 months or less.

There are exceptions to this which are set out below.

The regulation firstly sets out what employees are not entitled to the statutory sums:

Employees not entitled to notice of termination or termination pay:

1. The following employees are prescribed for the purposes of section 55 of the Act as employees who are not entitled to notice of termination or termination pay under Part XV of the Act:
2. Subject to subsection (2), an employee who is hired on the basis that his or her employment is to terminate on the expiry of a definite term or the completion of a specific task.

The qualifier to this exception is then added, hence making the individuals in these situations entitled to the statutory sums or notice:

1. the employment comes to an end before the fixed term has concluded; or
2. the employment ends before the specific task has been completed; or
3. the term is longer than 12 months; or
4. the specific task is not completed within 12 months; or
5. whatever the duration of the specific term may be, if employment continues for 3 months or more after that time period.

B.C.’s statute has a similar provision which eliminates the need for statutory notice for a fixed term contract which is 12 months or less in duration. It also has the same term requiring this notice if the fixed term expires and the relationship continues longer than a further three months. It does not have the early termination requirement.

Alberta’s statute, ¹ has the same impact for fixed term contracts 12 months or less in duration, as is the law in B.C.

Manitoba’s minimum standards law provides no need for statutory notice for a fixed term contract of any duration and also for a contract for a fixed objective and for a period 12 months or less. ²

Saskatchewan is much the same, stating that no statutory notice is required for a fixed term contract 12 months or less. ³

New Brunswick’s statute imposes no statutory notice for any fixed term contract, or for a specific assignment which is to be completed within 12 months, whether or not this time period is set out in the contract. ⁴ This same term is repeated in the Yukon statute. ⁵

The law of P.E.I. is similar as it negates the need for statutory notice for a fixed term contract 12 months or shorter. ⁸

Quebec negates the need for statutory notice for any fixed term contract of employment. ⁹

NWT has the same law denying an employee statutory notice for a fixed term contract of 12 months or less duration. ¹⁰ Nunavut does the same.

Newfoundland is the only jurisdiction which has a provision comparable to that of Ontario. It negates the requirement for statutory notice for a fixed term contract but only where the contract is completed for the set fixed term. The inference is that termination within this period will give rise to the statutory requirement.

Canada’s Labour Code does not speak to this issue.

Case Law

The Court of Queen’s Bench of Alberta in the 2013 decision of Gibson v Alberta, a decision of Ross J. reviewed a fixed term employment contract which failed to adhere to the minimum notice provision required by the Alberta legislation.

The employer was then faced with an argument that due to this defect, the contract should be ignored and the claim be made based on common law notice entitlement. This plea was rejected by the trial judge. Machtinger was not applied as in this context, it was determined that there was no intent to contract out of the protective legislation:

The Contract in this case does not specifically address termination notice or pay in lieu except by providing that, in the event of removal from office or resignation, salary and benefits would accrue only to the date of termination. There is no express provision relating to entitlement to notice or pay in the event of termination at the end of the term of the Contract. The fixed term itself excludes the application of the common law reasonable notice requirement, for the reasons set out in the previous portion of this decision. But is the provision of a fixed term an attempt to contract out of the termination provisions of the Code, or to exclude employee’s remedies available under the Code, such that the fixed term is “against public policy and void”?

[42]           In my view there is no reason to interpret a fixed term provision as an attempt to contract out of the Code. The Code in s 55(2)(c) provides that the requirement for notice of termination applies to contracts “for a definite term or task” of more than a year’s duration. That provision surely indicates that the mere existence of such a contract cannot be an attempt to contract out of the Code  or contrary to public policy.

A similar issue arose in a recent Ontario case in 2023. ¹¹ The plaintiff was hired on a fixed term contract for a period of 12 months. In this context, the agreement did not require ESA compliance. However, prior to the expiry of this fixed term contract, the plaintiff was terminated. On these facts, there became a need for the statutory period of notice, given three months of employment.

Both parties agreed that the contract in this context was offside the ESA. The plaintiff claimed the balance of the contractual term without a mitigation obligation. The employer argued that the fixed term contract was, in substance, a termination clause which should be voided as the termination clause was not in compliance with the statute. Hence, the company submitted the claim should be based on fair notice.

The same argument on the issue of remedy was raised unsuccessfully on appeal.

The plaintiff's position was successful.

In the case of a fixed term contract, there should be a provision which allows the employee the notice or severance as may be defined to in the relevant statute as a safeguard.