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Should an employer ever hire an employee on a fixed-term contract?

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Some do so in the belief that the employee will be gone without recourse at its expiry. But far more certainty is created through an effective termination provision, allowing for termination at any time. And with a fixed-term contract, you have to wait until its end or pay them until that end.

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Besides, most employers are poor administrators. More often than not, they forget to have the employee leave when the contract expires. And if the employee works beyond the contract’s end, it either automatically renews or the employee becomes entitled to general wrongful dismissal damages.

Another problem is that if a fixed-term contract is renewed, time and time again, almost automatically, the courts generally interpret that there is no longer a genuine intention for the employment to end on its expiry but, rather, view the contract as simply a mechanism to negotiate new compensation arrangements until the next contract.

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The Ontario Court of Appeal summed it up in the Ceccol decision.

“It seems … that a court should be particularly vigilant when an employee works for several years under a series of allegedly fixed-term contracts,” the court ruled. “Employers should not be able to evade the traditional protections of the ESA and the common law by resorting to the label of ‘fixed-term contract’ when the underlying reality of the...

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