Many clients have told me that they were given an employment agreement or offer letter that had a termination clause in it but they never read the clause or had it reviewed by a lawyer when they received it. They believed it was fine. Or they read the termination clause and thought they understood what it said, but really did not. Then when their employment was terminated without cause, they were surprised to learn that they could not claim for more pay in lieu of notice beyond what was provided for in the clause.
It is always best to have an employment agreement or offer letter reviewed by a lawyer before you sign it. If necessary your lawyer can renegotiate any objectionable clauses including a termination clause that diminishes or eliminates your right to claim for common law damages upon the termination of your employment. At the very least, an employment lawyer will make you aware of what you will receive by way of notice or pay in lieu upon the termination of your employment.
Here is a typical termination clause that addresses a termination without cause:
The company may terminate your employment without just cause upon providing you with your minimum entitlements provided for at law.
What does “minimum entitlements provided for at law” actually mean and what are my minimum entitlements?
“Minimum entitlements provided for at law” could mean minimum statutory entitlements or it could mean minimum entitlements set out in the common law or both. It is not clear in this particular clause what is meant, which would likely be a problem for the employer.
A better termination clause is as follows:
The company may terminate your employment without just cause by providing you with your statutory minimum entitlements set out in applicable employment standards legislation and no other or additional pay in lieu of notice.
This clause is clearer than the first example and may well be upheld by a court. The employee reading this clause however, still has no idea as to:
What are his or her “statutory minimum entitlements”
What “other or additional pay in lieu of notice” he/she may be forfeiting by signing the agreement.
The best thing you can do when given an employment agreement, is to consult an employment lawyer before you sign it. You know the saying…better the devil you know than the devil you don’t.
This article should not be relied upon as legal advice - the comments may not be applicable to you and may not be up to date. If you have any questions, you should contact a lawyer.