Is your organization walking a fine line between renewing contracts and indefinite employment relationships?
A fixed-term employment contract ends and neither side can agree on the terms of a new one, so they both walk away. End of story?
Not so much, if the last contract was the latest in a series of fixed-term contracts over years. That kind of pattern can turn fixed terms into the type of liability tied to an indefinite employment relationship, according to employment lawyer Jessica Bungay of Cox and Palmer in Fredericton.
“Employers can run into problems when they have employees on successive fixed-term contracts, because after a certain period of time where someone is continually working under such contracts, the law will view them is if they were an indefinite employee,” says Bungay. “And so you can't just rely on having one-year term contracts that renew for 20 years, and then let your contract expire and say, ‘We don't owe you anything because your contract expired’ — the law will view it more like an indefinite employment relationship and there would be entitlement to reasonable notice for termination without cause.”
And it’s a reason for HR leaders to stay on top of their organization’s practice in drafting and issuing employment contracts, and to also be aware of what their teams and management might be doing as well, says Bungay.
According to Bungay, the lesson is that the practical reality of the relationship will drive the...
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