Fixed-term employment contracts are a common way for organizations to structure their hiring.
Many employers use fixed-term contracts for a specific project or to test if an employee is the right fit before hiring them for the long term. Some employers use these agreements to temporarily replace an employee when they go on medical or maternity leave.
When done correctly, fixed-term contracts can reduce liability for employers. If not, however, they can have the opposite effect and may entitle the employee to more compensation than the employer anticipated.
Here are some of the most common questions I get as an employment lawyer from employees who are offered fixed-term contracts.
READ MORE: What you need to know before you sign an employment contract — even if your employer asks you to
Can I be fired before the end of my fixed-term contract?
In previous court cases, employers have been ordered to provide months or years of pay to employees whose contracts were ended early.
If you are fired before the end date of your contract, and the agreement does not contain an enforceable termination or exit clause, you are likely owed the balance of what you would have earned if you had worked the remainder of the contract.
A surprising number of fixed-term contracts that I review for clients do not contain an exit clause at all or have a poorly drafted one that would not hold up in court.
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READ MORE: The 5 facts you need to know about severance pay, according to an employment lawyer
What happens if my contract is renewed multiple times?
Employers often hire people on fixed-term contracts subject to periodic renewals, thinking that they will have flexibility to end a contract with minimal or no notice at the end of the term.
That is a misunderstanding. If your employer renews your fixed-term contract multiple times, it may transform the work relationship into one of indefinite duration, even if the contract specifies an end date.
That’s because multiple renewals may create a reasonable expectation that the contract will be repeated. If the intentions of the employer and employee are not clearly documented, our legal system will likely interpret any ambiguities in favour of the employee, as they are the more vulnerable member of the work relationship.
Can my employer make changes to my fixed-term contract?
Your employer can’t unilaterally change your fixed-term contract. If they make drastic changes to terms you have already agreed upon, you can treat those changes as a constructive dismissal.
If the company tries to force a new role or duties on you before the term of the initial agreement has ended, you are entitled to the remaining balance on the contract.
Do I get severance pay if I’m let go after multiple contract renewals?
Over the years, our courts have found that some employers use contract renewals to try to get out of their obligation to provide severance to an employee when a long-term working relationship ends.
I recently helped a client who worked three consecutive contracts with the same company. When the final contract expired, his employer let him know it would not be renewed a fourth time — and that he wasn’t entitled to any compensation.
After watching an episode of the Employment Law Show on Global TV, the individual contacted my firm for advice. I reviewed his situation and determined that his work relationship had evolved into an indefinite one, and was able to secure full severance pay from his employer within a relatively short period of time. A proper severance package can amount to as much as 24 months’ pay.
Severance is based on multiple factors, such as the length of employment with the company, your age and the type of work you did. An employment lawyer, like one of my colleagues at Samfiru Tumarkin LLP, can review the details of your contract and the relationship with your employer to figure out how much you should receive if you’re let go.
READ MORE: Severance pay for contractors: What to know and what to do if you think you’re an employee
Were you let go from a fixed-term contract? Do you have questions about your relationship with your employer?
Contact the firm or call 1-855-821-5900 to secure assistance from an employment lawyer in Ontario, Alberta and British Columbia. Get the advice you need — and the compensation you deserve.
Lumi Pungea is an employment lawyer and partner at Samfiru Tumarkin LLP, Canada’s most positively reviewed law firm specializing in employment law and long-term disability claims. Her firm provides free advice as the host of Canada’s only Employment Law Show on TV and radio.