In a recent decision, McGuinty v. 1845035 Ontario Inc. (McGuinty Funeral Home), the court awarded the Plaintiff with a damage award exceeding $1.27 million as a result of a constructive dismissal. In this case, the Defendant employer, signed a Fixed-Term 10-year “Transitional Consulting Services Agreement” with the Plaintiff employee. This Fixed-Term Agreement was notably silent on any terms addressing early termination or cancellation of the agreement. Less than one year after the employee commenced employment, disagreements began to arise between the two parties due to the employer’s abrupt changes to the employees’ employment. This ultimately resulted in the employee commencing a medical leave due to workplace stress. In assessing the case, the court found that the employer had failed to abide by the terms of the Agreement and over a short period of time, had exhibited such egregious conduct to amount to a constructive dismissal at law. In a devastating judgement for the employer, the court held that given the absence of a termination clause, a Fixed-Term Agreement obligates an employer to pay an employee to the end of the agreed upon term. Accordingly, the employee was awarded his salary and other entitlements for the nine years remaining in the Agreement. This case serves as a critical lesson for employers of the risks associated with Fixed-Term Agreements and highlights the importance of having a legal advisor review your Agreements to ensure you are not missing any key provisions!
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