A fixed end date does not necessarily protect an employer from substantial liability when employment ends early. In Dufault, the enforceability of the termination provisions was central to the outcome.

The employee’s contract was scheduled to continue until December 31, 2024. The employer terminated her employment without cause in January 2023.

The Court of Appeal upheld the finding that the for-cause provision permitted dismissal without notice or pay in circumstances broader than the narrow statutory misconduct exception.

Applying Waksdale, the court concluded that the termination provisions were unenforceable. It upheld damages of $157,071.57 based on the remaining fixed term.

Importantly, the Court of Appeal expressly declined to decide the separate arguments concerning the without-cause clause. Its judgment should not be described as endorsing every reason given by the lower court.

The Supreme Court of Canada subsequently refused leave to appeal.

What this could look like in practice

Imagine hiring a manager for a two-year project, then ending the employment after six months because the project is cancelled.

An initial review would examine the fixed end date, early-termination wording, compensation obligations, and any amendments. The reason the project ended would provide context, but it would not replace reviewing the agreement itself.

For an employee receiving an early termination offer, the remaining contractual term is an important document-based issue to raise.

The takeaway

Fixed-term agreements require careful drafting and review. Before ending one early or accepting a settlement, assess the termination provisions and the consequences if they cannot be enforced.

Contact JY Law to discuss your circumstances and how we may assist you.

This information is provided for general educational purposes only and does not constitute legal advice. The example is hypothetical. Your rights depend on the facts and current law. Reading this page or contacting our firm does not, by itself, create a lawyer-client relationship. If you have further questions or require advice about your situation, please contact us.