The Implied Term of Reasonable Notice
Summary
Every contract of indefinite employment carries an implied term that the employee is entitled to reasonable notice of dismissal absent just cause. It may be modified or displaced only by clear and unequivocal contractual language.
General Principles
There is an implied term in every contract of indefinite employment that an employee is entitled to reasonable notice of dismissal in the absence of just cause or in the absence of a specific agreement to the contrary.1
The implied term of the employment contract is only to provide reasonable notice of termination — there is no implied term that the employer may provide reasonable notice or pay in lieu of notice.2
Pay in lieu of notice represents damages for breach of the employment contract, not an attempt to comply with the implied term.3
Contracting Out
The implied term of reasonable notice may be modified4 or displaced5 by the express terms of the employment contract. However, an enforceable employment contract must contain “clear and unequivocal language” to modify or displace the implied term of reasonable notice.6
An employment agreement that stipulates a fixed term of notice or payment in lieu should be treated as fixing liquidated damages or a contractual amount.7
Fixed-term Contracts
There is no implied term of reasonable notice in fixed-term employment contracts.8
Where an employer unilaterally breaches or prematurely terminates a fixed-term contract without just cause, the employee will instead be entitled to damages equivalent to the compensation the employee would have received had they worked to the end of the term.9 However, where the fixed-term employment contract contains an enforceable early termination provision, such a provision will instead govern in the event of the employer’s unilateral breach or premature termination of the fixed-term contract.10