Delivering on Your Promises: Aligning Contractual Commitments with Outcomes on Termination

If you are a regular reader of our blog, you’ll already know that we’re big advocates of conducting regular audits on your employment contracts. There are many good reasons for conducting regular audits, along with your legal counsel, but as many employers now know, the termination provision is of particular importance. During this type of audit, lawyers typically focus on reviewing the drafted language in your termination-related provisions to determine if the language still stands up in light of our ever-evolving case law. 

While this sort of review can never be undervalued, a recent case reminds us of another key review to undertake before terminating an employee–confirming the termination package aligns with the promises in the employment contract. 

What Happened?

In this case, the employment contract promised that in the event the employee was terminated without cause, the employee would be provided with the greater of their minimum standards entitlements or three months of pay. Three years after entering into the contract the employer decided to terminate the employee on a without-cause basis. 

Upon termination, and despite the contract promising the greater of minimum standards or three months of pay, the employer only offered the employee one week of pay. The employer offered to pay the remainder of the three months promised by the contract only if the employee signed a full and final release. Beyond limiting future claims, the full and final release also included terms requiring the employee to agree that they wouldn’t disclose the terms of the settlement or disparage the employer.

Ultimately, the Judge determined that in failing to provide the entitlements promised by the contract’s termination clause, the employer demonstrated that it no longer intended to be bound by the terms of the contract. 

Why Does this Matter?

Ultimately, like the outcome in this case, when the employer has demonstrated that they no longer intend to be bound by the terms of the contract (at law we call this repudiation of a contract), they can no longer seek to rely on a term that limits the employees’ entitlements upon termination. Practically, this means that all that hard work you put into the contract in a bid to limit potentially significant entitlements is out the window…and all because of a failure to follow the very promises you made in the contract. As a result, the employee would be entitled to common law reasonable notice upon termination which is typically far more generous than minimum standards or whatever was initially promised in the contract.

The best way to avoid an outcome like the one in this case is to check the terms of the contract before terminating and ensure that you a) understand those promises and b) are actually delivering on those promises. To be sure that you deliver on your promises, we recommend that you reach out. 




Share the Post:

Related Posts

Employees reviewing AI-generated work on a computer in an office, highlighting the importance of AI expert oversight and responsible workplace AI use.

Your AI Isn’t the Expert. You Are.

AI can generate answers in seconds, but speed doesn’t guarantee accuracy. Employers who rely on AI without proper oversight may expose their businesses to legal, privacy, and reputational risks. Discover why expert review matters, what AI gets wrong, and how a responsible AI strategy can help your organization benefit from innovation while minimizing risk.

Read More »
Overhead view of a modern workspace with a laptop, resumes, job description documents, notebook, coffee mug, and subtle digital connections showing how AI is already integrated into everyday workplace tasks.

Why Every Employer Now Needs an AI Policy (Even If You Think You Don’t Use AI) 

Think your company doesn’t use AI? Think again. Employees are already using AI tools to draft emails, review resumes, and create content, often without formal approval. An AI policy helps employers manage privacy, confidentiality, intellectual property, and compliance risks while encouraging responsible innovation. Learn why every employer needs clear AI guidelines before a problem arises.

Read More »
Two workplace professionals reviewing information on a laptop during a discussion about employee wellbeing and psychological safety in a modern office.

Psychological Safety and Employer Liability in Ontario: What You Need to Know 

Psychological safety is no longer just an HR concern. Ontario employers are increasingly expected to identify and address workplace factors that can contribute to psychological harm. From harassment and bullying to WSIB mental stress claims, failing to manage these risks can have legal consequences. Learn what psychological safety means in practice and why employers should take proactive steps now.

Read More »

Contact Us

Thank You For Your Interest. Kindly Complete The Form Below. Our Client Services team will be in touch with further information about our fees and intake process.
[grow-contact-form]