Background
In 2014, MTI entered into an asset purchase agreement with
In 2018, Joy Global notified
In his motion for summary judgment,
-
His contract with Joy Global was void on the basis that it was a continuation of his contract with MTI, and he did not receive fresh consideration for accepting the more onerous termination clause.
- The termination clause was ambiguous and therefore unenforceable.
Decision
The Court held that Joy Global was not a successor company to MTI. It had no legal obligation to hire
Both parties agreed that in order for a termination provision to be enforceable, it must be clear and unambiguous. The clause in question provided as follows:
. The Company shall be entitled to terminate your employment without just cause for any reason upon the provision of reasonable notice or payment in lieu that meets the requirements of the applicable employment or labour standards legislation. By signing this Employment Agreement, you agree that upon the receipt of your entitlements and benefits in accordance with such legislation, no further amounts will be due and payable to you whether under statute or common law. [emphasis added]
The Court found that the termination clause was sufficiently clear and unambiguous to rebut the common law presumption of reasonable notice. The language of the provision confirmed the parties' intentions that the "notice" to which
The Court held that the termination clause in
Lesson for Employers
Employment contracts are of significant value to both employees and employers as they expressly stipulate the terms and conditions of employment so that both parties understand what has been agreed to. A without cause termination provision can be particularly important to employers as such provisions, when properly drafted, can rebut the presumption of common law reasonable notice that would otherwise apply. This has the ability to significantly limit an employer's potential liability. It also, in theory, alleviates the debate as to what an employee's entitlements are upon a termination without cause.
Employment contracts must comply with the applicable employment standards legislation. The New Brunswick Employment Standards Act requires that an employee who is terminated without cause be given a minimum of two weeks' or four weeks' notice, or pay in lieu, depending on how long they have been employed.
Employers and employees cannot agree to a contract that provides for less than the statutory minimums. They may, however, agree that the employer will not pay more than the statutory minimum and may specifically contract out of the implied term of common law reasonable notice. To do so, the wording of the contract must be clear and unambiguous.
While courts have said that no particular form of words is required to exclude common law reasonable notice, the cases are clear that it is crucial to consider both the specific words used and the context in which they appear, i.e. the full text of the clause. Where a termination clause is unclear, ambiguous, or internally inconsistent, an employer runs the risk that it will be found invalid, which may lead to expensive and unintended results.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Ms
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