A Nova Scotia from 2025 discusses the importance of proper drafting of unambiguous termination clauses in employment agreement. Among the reasons that the Supreme Court of Nova Scotia found in favour of the employee was the lack of a comma in a section of the termination clause.
Background
Brocklehurst v. Micco Companies Limited, 2025 NSSC 192, featured an employee with 8.5 years of service who was terminated without cause by his employer, Micco Companies Limited, a family-owned group of business in Nova Scotia. The Employee’s employment agreement contained the following termination clause:
“Termination Without Cause:
Your employment may be terminated by Micco without cause, upon provision to you of the following payments:
(i) any portion of the annual salary and accrued vacation pay, if any, that has been earned by your [sic you] prior to the date of termination by [sic, but] not yet paid;
(ii) continued participation in Micco group health plan for such time as may be required under Nova Scotia Labour Standards legislation; and
(iii) only such minimum notice of termination, or pay in lieu thereof, and severance pay (if applicable) to which you are entitled under the Nova Scotia Labour Standards legislation.”
The employer terminated the employee’s employment by providing 4 weeks of pay in lieu of employment in line with the Nova Scotia Labour Standards Code. The Employee did not receive reasonable notice as the employer relied on the above termination clause to limit the employee’s entitlement to those found in the LSC. The employee sued for reasonable notice.
The Decision
The Court reviewed the termination clauses and focused on Subsection (iii) stating that the qualifier “to which you are entitled under the Nova Scotia Labour Standards Legislation” could reasonably be interpreted as not applying to the minimum notice of termination and only applying to the “severance pay (if applicable)” portion of Subsection (iii).
The Court also noted that as a result of this grammatical structure, the termination provision did not limit the employee’s termination entitlements to the LSC minimum standards. The Court also considered that the words “severance pay” did not appear in the LSC, so could not be interpreted as limiting the employee’s entitlements to the LSC minimums. As a result, the employee was entitled eight months of reasonable notice based on the employee’s total compensation.
Takeaways
Employers should scrutinize and, if necessary, amend their employment agreements to ensure termination clauses are unambiguous and explicitly limit employees’ common law notice entitlements.
Bridge Legal & HR Solutions can assist with getting your business compliant today. To find out how we can help, contact us through our contact form or call us at 647-794-5442.
