Articles & Media

Employment Contracts Can Limit Employees to a Fixed Sum on Termination


By Hugh McPhail, Q.C.

In the second decision in a week in favour of upholding the plain meaning of employment contracts, the Alberta Court of Appeal affirmed that when an employment contract says that an executive’s termination pay will be “12 months salary” and “salary” is carefully defined in the contract, that that is binding and eliminates any right to “reasonable notice”. That is all the employee is entitled to unless he has other separate contractual entitlements such as, as he had in this case, long term incentive plan rights. Employment contracts defining termination pay are binding as long as the stated termination pay will always be greater than any statutory minimums.

The Court of Appeal dismissed the Plaintiff’s appeal in Cornelson v. Alliance Pipeline Ltd., 2017 ABCA 13 today. Counsel for the employer were Don Dear, Q.C. and Jamie Flanagan of McLennan Ross.

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