A fundamental principle in employment law is that when terminating a contract without cause, an employer must give reasonable notice. This principle is not absolute however, as it does not apply to fixed-term contracts, as these contracts simply run their course and then cease. It comes as no surprise then that some employers have gotten into the habit of offering repeated fixed-term contracts as a way to limit an employee’s right to proper notice upon termination.
The Ontario Court of Appeal looked at the line between fixed and indefinite term employment contracts in the case of Ceccol v. Ontario Gymnastics Federation. Diana Ceccol was hired on a one-year contract as the administrative director for the Ontario Gymnastics Federation (‘OGF’). At the conclusion of her first year of employment, the OGF renewed Ceccol’s fixed-term contract and after 16 successive years of renewals, the OGF terminated her employment. The contract then in effect contained a clause that limited Ceccol’s notice period to that set out in the Ontario Employment Standards Act (‘Act’). The Act provided for mere weeks of notice of termination, even for long-term employees. The OGF sought to rely on that clause to limit Ceccol’s notice period.
Ceccol sued for a longer notice period, arguing that she believed she was a full-time permanent employee. The Court agreed and relied heavily upon case law dealing with standard form contracts. The Court felt that that individuals signing standard form agreements may not fully understand the stringent and onerous conditions in such agreements (for example, what might be in the fine print), and therefore the party holding out the contract has an obligation to draw these conditions to the attention of the individual who is signing.
The Court also noted that the consequences for an employee of a finding that an employment contract is for a fixed term are serious. Employers would be able to evade the protections contained in the law by resorting to the label of ‘fixed-term contracts’ when the relationship more closely resembled a permanent contractual arrangement.
It was concluded that if the OGF wished to enforce the notice clause as outlined in Ceccol’s contract, the OGF should have drawn that clause to her attention. The Court found that Ceccol had a reasonable belief that at some point over her lengthy career she had become a ‘permanent’ employee rather than a short-term contract employee. The Court said she was entitled to consideration for her multiple years of service, and she was granted 16 months of severance (in lieu of notice), rather than the few weeks provided by the contract.
What does the Ceccol case tell us? Employees who are repeatedly hired to consecutive contracts may, after a number of years, be entitled to consider themselves permanent employees, at least for calculating notice upon termination.
- Employers who face situations where, due to funding or budget cycles, they are constantly renewing term contracts with their employees should consider the following in order to achieve fixed-term employment:
- Be clear and unambiguous in the wording of the contract as to when it will end.
- Do not let the employee continue to work after the expiry date – rather, prepare a new contract and ensure that it is negotiated well in advance of the expiry of the old one.
- Keep a written record of negotiations so that, if there are any perceived differences regarding the final terms, your notes will support the intention of a fixed-term agreement.
- Specify in the contract that upon the expiry of the fixed term, the employment terminates and no severance will be owed, and that the contract itself is notice of the termination.
- Provide the employees with the opportunity to have the contract independently reviewed by a lawyer.
Ceccol v. Ontario Gymnastics Federation  O.J. No. 304.
Originally published: Centre for Sport and Law Newsletter (2007) Vol. 3(1)