Termination clause in an employment contract: Facts employees must know

Posted by johnhrq on January 29th, 2021

Most employees in Canada, especially first-timers feel overjoyed when they land their dream job. They have been persevering for it, have worked hard, and even made sacrifices. No doubt, that when they are offered a position, they jump for it, and quickly sign on the dotted line.

This is a risky thing to do, say top corporate lawyers Alberta since many employment contracts from companies across different provinces in Canada contain legal text which can be quite limiting on the rights of an employee, especially clauses related to termination, non-compete, or non-solicitation.

Significance of the termination clause in an employment contract

Most employees overlook the termination clause when taking up a new job. After all, the very thought of ending an employment feels unreal to them, as their mind is full of positive things about their new employer, and they are not open to look at other aspects and terms of the employment contract.

However, in their excitement they fail to realize that these clauses have the potential to significantly limit their severance entitlements upon termination, and therefore it makes sense for them to form a good understanding of the termination clause before signing.

The clause is important for employers too, as it covers an employer’s severance obligations upon terminating an employee.
Corporate lawyers Alberta say that even the courts have clearly indicated that the termination clauses will be heavily scrutinized to ensure that they are legally enforceable in the event of a dispute.

Facts that an employee must know about a termination clause

As per the rules of employment in Alberta, an employer cannot contract out of the minimum amount of termination notice (or pay in lieu of notice) that is owed to an employee.

This minimum amount of notice or pay in lieu of notice is usually known as “termination pay.” In addition to these minimums, an employee might be entitled to further compensation pursuant to the common law (court cases). This is usually known as “severance”.

An employee could hold an employer liable for damages arising from wrongful dismissal, in case employers do not provide an appropriate severance amount to a terminated employee.

The quantum of the severance amount is based on a number of factors such as:

- Age of the employee.
- Length of the employee's employment.
- Availability of comparable work.

Drafting of termination clause in an employment contract

Notwithstanding the above facts, corporate lawyers Alberta state that if the termination clause is well-drafted, then the employer can contract out of, or severely limit, the employer’s obligation to provide further notice to employee, or severance.

If this happens, then the employee would receive a severance amount that is significantly less than what would have been awarded by a local court. The employee would also be barred from bringing a claim for wrongful dismissal against the employer for further severance.

The above-mentioned description is actually the situation that is prevailing in most small and mid-sized companies. In most cases, either the employment contract is non-existent, or even in cases where it is existent, then the wording of the employment contract, especially the termination clause is so poor, that it is generally unenforceable.

Peace of mind with termination clause in an employment contract

As an employee starting a career, it is advisable to have your employment contract reviewed by corporate lawyers Alberta before signing it off. This will provide you a peace of mind and help you avoid nasty surprises later on in your career path. You can keep focusing on your work single-mindedly without any distraction.


Corporate lawyers Alberta are friendly and experienced. They can advise you about potential risks or impacts arising from the language in the employment contract, and can also help you negotiate with your potential employer on more favorable terms, for instance inclusion of a more generous severance entitlement, or a shorter non-compete/non-solicit period.

For more information about Small Business Lawyers and Small Business Contract Lawyers Calgary Please visit : Du Plooy Law.

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Joined: June 5th, 2017
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