The majority of workers in Canada are employed on a permanent basis, with an employment contract of indefinite duration; that is, with no specified end date.
In Ontario, these workers are referred to as indeterminate employees, and they have certain rights, which may include reasonable notice upon termination. Employees under a fixed-term contract, on the other hand, with a set end date, generally are not entitled to such benefits.
Indeterminate employees understandably feel more secure in their employment when compared to those working pursuant to fixed-term contracts. Recently, however, there have been interesting cases touching on a terminated employee’s entitlements when employed pursuant to a fixed-term contract, which may in fact be much higher than those of an indeterminate employee and that may not require mitigation (seeking new employment).
Another interesting issue that arises with fixed-term contracts is whether repeated renewals can push an employee into the realm of indeterminate employment. Generally speaking, in Ontario, an employee that works continuously pursuant to multiple fixed-term contracts will be deemed to be an indeterminate employee. This is certainly something of which employers should be mindful.
However, a recent case decided in New Brunswick has taken a very interesting position on this issue and should not be ignored, even if it comes from another province. Let’s look at the case of Burns v. UNB.
Terry Burns worked with the English Language Program (“ELP”), operated by the University of New Brunswick (“UNB”). His employment lasted from 1978 until 2016, and was subject to a series of fixed-term contracts. Each contract contained start and end dates, but had no clause dealing with renewal. The terms and conditions of the contracts varied, but they were all for fixed-term periods. There were also gaps in Mr. Burns’ employment over the years, some of which were quite lengthy.
On October 22, 2015, Mr. Burns was offered a three-week module contract for November 2015; he declined the work. As such, he was later informed that the end date of his contract term with ELP would be December 18, 2015. He did not return to work for UNB.
At issue was whether Mr. Burns’ employment had become permanent (indeterminate) and therefore he had been wrongfully dismissed, or whether his employment was actually for a fixed term and simply ended in accordance with the terms of his last contract.
Mr. Burns argued that he was a permanent employee and not simply a contract worker. His arguments included, but were not limited to, the following:
- UNB sent him for training in professional development on a regular basis at its expense;
- He was involved in interviewing and hiring prospective employees;
- There was never any communication throughout his employment that suggested his return to work after his term was in doubt;
- He was regularly called for work and did not have to renegotiate or reapply for work; and
- He was provided with all the necessary tools and supplies to carry out his duties.
In contrast, the employer advanced the following arguments to support its position that Mr. Burns was a contract employee:
- Almost all work within the ELP is done on a short-term contract basis;
- All contract employees, including Mr. Burns, experienced reductions in contracts and/or number of hours per contract when enrolment in the ELP program began to decline in 2009;
- Burns’ service was not continuous, with gaps in employment varying up to as many as 32 months between contracts;
- Burns’ contracts were never automatically renewed and were renegotiated each time;
- The fixed contracts often varied in length, salary, position, and tasks; and
- Burns did not always accept employment opportunities; including, for example, the opportunity in November 2015.
Justice Clendening reviewed two precedential Ontario Court of Appeal cases, namely Howard v. Benson Group Inc., and Ceccol v. Ontario Gymnastics Federation, before deciding that Mr. Burns was in fact only working pursuant to a fixed-term contract.
Clendening J. set out the following facts with respect to the fixed-term contracts that existed between the parties:
- There was no ambiguity in the contract between Mr. Burns and UNB;
- The contract did not reference further contracts or renewals or extensions;
- There were gaps between contracts of various lengths and times of the year; and
- There were times when UNB offered Mr. Burns a contract that he did not accept.
Justice Clendening found that the following factors supported the finding of a fixed-term contract:
- There was no continuous employment between the parties. All ELP contract employees were told repeatedly that there was no guarantee of work in the future;
- Contracts varied in length, duties, and position. Mr. Burns had the opportunity to and did negotiate terms of his contract;
- The rate of pay was discussed and negotiated;
- Records of Employment were issued over the years;
- Burns did not receive benefits or pension from ELP or UNB;
- Burns did not receive vacation or sick time, but he did receive vacation pay in his statement;
- Burns had no authority over staff members or any students; and
- The training he received was quite limited.
Justice Clendening concluded that Mr. Burns was not entitled to reasonable notice of his termination, as his fixed-term contract, which was clear and comprehensive, simply came to an end. Therefore, he was not wrongfully dismissed.
The New Brunswick Court of Appeal dismissed Mr. Burns’ appeal on January 17, 2018.
Importance of this case
Even though this is a case from New Brunswick, it does demonstrate the tenuousness of fixed-term contracts. With the right facts, and especially the right wording in an employment contract, it is possible that someone could be hired over multiple decades, using multiple fixed-term contracts, and then simply have their employment end at the completion of one of those terms without having to pay out any reasonable notice damages.
If you have any questions about your fixed-term contract, or would like to hire someone pursuant to a fixed-term contract, we recommend speaking with one of our lawyers in our Employment Law Group.