Impact of Fixed Term Contract

The intuitive view is that there is no obligation to give notice of termination, given a fixed term contract. This is not a correct statement of law. There are situations which will require statutory notice and/or severance.

Absent these situations it is true that an employee whose term has expired gets a warm handshake and no more.

The Supreme Court of Canada in Chambly v Gagnon concluded that at the end of the fixed term contract, there was no act of dismissal. The agreement simply expired and ended its natural life. Gonthier J. stated:

For the reasons of Bishop J., we are all of the view that the appeal should be allowed and the judgment of the Superior Court restored.  We share in particular his view as to the meaning of the word “dismissal”.  In this case there was no dismissal since the City did not carry out any act which deprived the respondent of his office or post; his post as chief of police ended owing to the expiry of the fixed term set out in his contract of employment without a new contract being entered into.

It is for this reason that common law courts have concluded that there must be “unequivocal and clear language” to establish a fixed term contract. As stated by MacPherson J.A. of the Ontario Court of Appeal in Ceccol v Ontario Gymnastic Federation in September of 2006.

However, the consequences for an employee of finding that an employment contract is for a fixed term are serious:
the protections of the ESA and of the common law principle of reasonable notice do not apply when the fixed term expires. That is why, as Professor Geoffrey England points out in his text Individual Employment Law (Toronto: Irwin Law, 2000), "the courts require unequivocal and explicit language to establish such a contract, and will interpret any ambiguities strictly against the employer's interests" (p. 222).

Mitigation

The current state of the law in most jurisdictions is that there is no mitigation obligation in a fixed term contract, or indeed, one which sets out a pre-determined notice period. This issue is reviewed here.