A “without cause” termination provision that incorporated the statutory entitlements from employment standards legislation is valid for an employer that terminated a worker’s fixed-term employment contract early, according to a Manitoba court.
The worker had his own electrical contracting business with his wife, which they sold in 2021 to Colin’s Mechanical Service, a Winnipeg-based provider of plumbing, heating, gas, and air conditioning service and repairs.
The share purchase agreement (SPA) included $250,000 payable in four annual instalments beginning on the first anniversary of the closing date of the transaction. It also had a condition that the worker enter into a four-year fixed-term employment agreement with Colin’s Mechanical, expiring on July 31, 2025.
The employment agreement included a termination clause allowing Colin’s to terminate the worker’s employment “at any time during the term” without cause “subject to notice or payment in lieu of notice or some combination of notice and pay in lieu, in accordance with the Employment Standards Code of Manitoba.” A “without cause” termination wouldn’t affect the outstanding balance of the SPA.
There was also a “with cause” termination provision that listed several examples of conduct that would provide just cause for termination without notice or payment, including
“just cause as construed at common law.”
On April 1, 2024, Colin’s informed the worker that his employment was being terminated...
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