Rebutting the Presumption of Reasonable Notice
The presumption of reasonable notice will be rebutted if there is clear and unambiguous evidence that the employee and employer agreed to another manner of determining the dismissed employee’s entitlements upon termination. This is established by having the future employee sign an employment contract that contains a termination clause that either sets out a different notice period or provides a formula for calculating the employee’s notice period at the time of dismissal.
It is important that the candidate sign the employment contract prior to starting his or her first day of work. The terms of an employment contract that are signed after the employee starts his or her employment may not be enforced for want of consideration.
The termination clause must, at a minimum, provide the employee’s entitlement pursuant to the Employment Standards Act1 (“ESA”). The Supreme Court of Canada held in Machtinger v. HOJ Industries Ltd.2 that if an employment contract contains a termination clause that provides an employee with an entitlement upon termination other than reasonable notice, that entitlement must be at least equal to the employee’s minimum notice and severance entitlements as set out in the ESA. If the termination clause provides the employee with less than his or her entitlements pursuant to the ESA, the termination clause will be unenforceable and the court will strike the termination clause from the employment contract and award the employee reasonable notice of dismissal. The court will not rewrite the termination clause to bring it into compliance with the ESA.
Significantly, a termination clause that may potentially breach the ESA in the future might also not be enforced by a court. There is currently conflicting decisions on this point in Ontario. This is covered in detail, along with further information dealing with rebutting the presumption of reasonable notice, in the sub-chapter on termination clauses.