A fixed-term employment contract is an agreement that sets a specific start and end date for employment.
In Ontario, fixed-term contracts can significantly affect an employee’s rights — especially if the employment ends early. While these contracts are common, they are often misunderstood and frequently drafted incorrectly.
What Is a Fixed-Term Employment Contract?
A fixed-term contract is a type of employment agreement in Ontario where the job is intended to last for a defined period of time, such as:
- Six months
- One year
- A specific project or term
Unlike regular (indefinite) employment, a fixed-term contract is supposed to end automatically on a set date without notice.
How Fixed-Term Employment Contracts Work in Ontario
Courts closely examine fixed-term contracts to determine whether they are truly time-limited or whether they function like regular employment.
Key points to understand:
- The end date must be clear and unambiguous
- Repeated renewals may undermine the “fixed-term” nature of the contract
- Changes to duties, pay, or structure can affect enforceability
If a fixed-term contract is not properly drafted or applied, it may be treated as indefinite employment, with full termination rights.
Can a Fixed-Term Employment Contract Be Terminated Early?
Yes — but early termination can be costly for employers.
If a fixed-term employment contract ends early and does not contain a valid termination clause under Ontario Law, the employee may be entitled to compensation for the entire remaining term of the contract.
This is very different from how termination works for regular employees.
What Happens When a Contract Ends Early?
When a fixed-term contract is terminated before its end date, several outcomes are possible:
- The employee may be owed pay for the balance of the contract
- Termination clauses may not limit liability unless carefully drafted
- Common law damages may apply instead of minimum standards
Common Problems With Fixed-Term Employment Contracts in Ontario
Many fixed-term contracts fail because of how they are written or applied.
Common issues include:
- Unclear or missing end dates
- Rolling renewals that blur the fixed-term nature of employmen
- Invalid early termination clauses
- Contracts that continue past the stated end date without renewal
- Attempting to limit liability without meeting Ontario legal requirements
These issues can expose employers to significant liability and leave employees uncertain about their rights.
When Should a Fixed-Term Employment Contract Be Reviewed?
A fixed-term contract should be reviewed in several situations, including:
- Before signing a new agreement
- Before renewing a fixed-term contract
- If employment ends early
- When job duties or compensation change
Understanding the contract early can help avoid surprises if the employment relationship ends.
Get Advice About a Fixed-Term Employment Contract in Ontario
Fixed-term employment contracts can limit rights — or create unexpected obligations — depending on how they are drafted and applied.
Before relying on a fixed-term contract, or assuming it limits what you are owed, it’s important to understand how Ontario employment law applies to your situation.
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