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Invalid Employment Contracts

There are several problems that can exist in employment contracts, and which can result a written contract being legally invalid or unenforceable.  These include:

(a) Successive or fixed term contracts / expired contracts – Courts may hold that successive fixed term contracts in fact amount to a employment contract of an indefinite term. If an employee had a fixed term contract, but continued to work beyond expiration of the term, the contract will become one of an indefinite term. If an employee had an indefinite term contract, and then signed a fixed-term contract, the new contract may not be valid.

(b) Consideration – a lawyer specializing in employment law will want to scrutinize the relevant dates and events surrounding entry into the contract.

(c) Contracts invalid due to vagueness or ambiguity – Courts examine the wording of the contract terms to determine whether a clause is unenforceable because of vagueness or ambiguity. If a clause is not enforceable, courts may base the terms of the agreement on the conduct of the employer and employee and on pre-contractual communications between the parties, rather than on the wording in the written document. For example, see: Alsip v Tap Rollshutters Inc. alba Talius, 2016 BCCA 252

(d) Contracts invalid due to non-compliance with the ESA – Any term that does not meet the minimum standards set out by the ESA (for provincially regulated employees) or the Canada Labour Code (for federally regulated employees) is invalid. A contractual termination clause is not enforceable if at any time it provides for less than his/her notice entitlement under the ESA. See, for example, Shore v. Ladner Downs, [1998] 160 DLR (4th) 76. If a notice provision in a contract is invalid, then the employee will likely receive whatever amount he/she was entitled to under the common law, instead of what the document states.

The above assumes that the contract is not a fixed term contract. For fixed term contracts containing severance clauses, the above may have been qualified (at least in BC) by case law in the past few years.

There are other less common reasons that employment contracts may be invalid.  An employment lawyer will be able to assess whether other factors may be present which render a contract invalid.


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