August 5, 2025
Employers- even if you have a valid termination clause in your employment contracts (see our numerous prior articles on this topic), you must fully comply with the terms of the clause, or risk being found in breach of the contract, leaving you responsible to pay greater amounts to the departing employee, as damages for breach of contract.
THE CASE
This is what happened in Timmins v. Artisan Cells , an Ontario Superior Court of Justice decision.
In that case, the employer withheld the contractual termination payment, demanding that the employee sign a full and final release. This demand was found to be a breach of contract.
The employee received a judgment for common law damages equivalent to nine months of compensation. The contractual amount would have been three months compensation. The employee was a senior executive with generous compensation.
The demand for the release was very costly for the employer.
TAKEAWAYS
- Termination clauses will be applied strictly according to their terms, if they are applied at all
- A well written termination clause should contain a provision for a release, if that is what the employer expects
- Don’t demand something you are not entitled to
- When terminating a senior employee, the cost of legal help is a small and sound investment.
- Legal advice is really a wise investment in any termination situation, but the cost benefit ratio when considering executive compensation makes it especially worthwhile.
WHAT WEILERS LLP CAN DO TO HELP YOU
The cost of having a lawyer review or draft your employment contract template, or where appropriate, create a custom agreement, is modest compared to the cost of litigation. Templates should be updated regularly to keep current with the law, and it is always risky to use a form of contract found on the internet or drafted by a non-professional.
Where you decide that you intend to terminate, Weilers LLP can also look at your existing agreement, consider all the relevant facts, and advise you regarding the potential for it to be found either valid or invalid, so that you can approach offers and negotiations on a well-informed basis.
We can assist with negotiating a severance package and defend employers in wrongful dismissal cases.
At Weilers LLP, we also advise employees and assist them in understanding and negotiating employment contracts at the front end of the relationship, and as to their rights on termination. It is always smart to have a lawyer review any termination offer before you accept it.