July 11, 2012

A little employment law for regulators

Professional Regulation

Regulatory bodies do more than simply regulate the activities of their members; they are also corporate bodies that may employ staff, enter into contracts, acquire and dispose of property, and otherwise engage in activities that involve legal considerations. In the field of employment law, the recent unanimous decision of the Ontario Court of Appeal in Bowes v. Goss Power Products 2012 ONCA 425 will be of interest with respect to the use of fixed term employment contracts.

Generally, under indefinite term contracts, termination of an employee without cause requires reasonable notice or payment in lieu of notice, subject to the terminated employee’s duty to mitigate by seeking new employment. If an employee finds new employment within the notice period, the amount they earn in their new position during the notice period can be deducted from the payment in lieu of notice from the terminating employer. When an employee under a fixed term contract is terminated without cause, on the other hand, they will be entitled to be paid up until the end of the contract term, unless there is an early termination clause.

With respect to mitigation, the Ontario Court of Appeal in Bowes held that where a fixed term employment contract contains no clause with respect to mitigation, the terminated employee will be entitled to payment for the rest of the fixed term contract regardless of whether they are able to find new employment immediately after – meaning that the employee in that case was able to receive six months pay from his terminating employer despite moving on to an equivalent position with a new employer almost immediately after his termination.

Fixed term employment contracts have their advantages  and disadvantages, depending on the regulatory bodies’ staffing needs. This case is a reminder that it is important to understand the differences between an indefinite employment contract and a term employment contract.

Bowes v. Goss Power Products 2012 ONCA 425