Fixed-Term Employment Defeats Wrongful Dismissal Claim
In Steele v. The Corporation of the City of Barrie, 2022 ONSC 7245, the Ontario Superior Court of Justice provided guidance on how courts will determine whether an employment relationship is truly fixed-term such that it disqualifies the employee from employment standards benefits.
Whether an employment relationship is fixed-term or indefinite can have a drastic effect on an employee’s entitlements under the Employment Standards Act, 2000. Certain employment standards protections afforded to employees, including notice of termination (or pay in lieu), are generally unavailable to valid fixed-term agreements. This is because such an employee was effectively given notice at the onset of their fixed-term employment. Such agreements are therefore heavily scrutinized by courts to determine whether the underlying employment relationship is more accurately described as an indefinite-term one, with all the employer obligations that follow such a finding. Courts will therefore require fixed-term agreements to be unequivocal and explicit, with any ambiguities interpreted strictly against the employer’s interest.
In Steele, the Plaintiff was hired on a fixed-term two year employment agreement, which was extended on four occasions. After three and a half years, the employer declined to further extend the Plaintiff’s employment. The Plaintiff sued for wrongful dismissal claiming pay in lieu of notice and punitive damages. The court found that the relationship was accurately described as fixed-term. As a result there was no breach of contract or wrongful dismissal and the Plaintiff was not entitled to recover any damages.
At no time was there any objectively reasonable indication that the employment term would be indefinite. The agreement and extensions were neither unclear nor ambiguous in describing the employment as temporary, with fixed dates, and there was no sound or objective basis for the Plaintiff to form the impression that the employment was indefinite. Indeed, the Plaintiff’s conduct suggested that he understood this to be the case by expressing his gratitude and best wishes after being informed that his contract had ended.
Even if there was ambiguity in the contract or extensions, these would have been resolved by the following facts:
- The job posting, employment agreement and extensions all confirmed the employment was temporary, and provided a date “up to” which the employment would run.
- The extensions were granted before the end of each respective term would end, providing compelling evidence that the employment would otherwise have expired.
- The extensions were not pre-destined by either the contract or conduct of the employer.
- It was accepted that the contract and extensions were conceived as fixed and treated accordingly by all parties.
- The Plaintiff’s evidence that the employment was indefinite was unreliable and weak.
The court also rejected the argument that because there had been continuous service for several years, with several extensions, that this had established an indefinite-term relationship in spite of the fixed-term contract. There was no ambiguity in the contract or extensions, nor conduct which could have objectively signalled any other arrangement but a fixed-term employment.
This case demonstrates that fixed-term agreements face a great deal of scrutiny, but if dealt with properly can be upheld. Employers should take care to ensure that they are clear and unambiguous about the temporary nature of the employment, in both their written agreements and extensions, as well as in their conduct throughout the relationship.