Case In Point
Nova Scotia Court Finds Cross-Canada Termination Clause Unenforceable: A Cautionary Tale for Multi-Jurisdiction Employers
Date: January 26, 2026
In Brocklehurst v Micco Companies Limited (Brocklehurst), the Supreme Court of Nova Scotia ruled that the termination clause in an employment agreement did not effectively limit the employee to his statutory minimums on termination due to grammatical ambiguity and improper statutory reference.
The decision is a cautionary tale for employers operating across multiple Canadian jurisdictions who choose to use a single Canada-wide employment agreement template. It reinforces the need to include clear, specific language when referencing any potential entitlements an employee may have under the “applicable employment standards legislation.” Accordingly, it may be prudent for employers to use a separate template in each jurisdiction where their employees are based.
Background
The employee was employed by Micco Companies Limited as a sales representative for over 8 years until his employment was terminated on a without cause basis. The terms of his employment were outlined in a letter of employment, which included a base salary of $36,000 with the potential for higher annual commission earnings. The letter of employment also contained the following express termination provision:
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. [Emphasis added]
Upon termination, the Employer provided the employee with four weeks’ pay in lieu of notice, pursuant to his minimum statutory entitlements under the Nova Scotia Labour Standards Code (Code).
The employee argued that the termination provision did not effectively limit his common law termination entitlements because it was ambiguous, unclear, and attempted to contract out of the Code.
The employer argued there was no ambiguity in the termination provision and that it clearly limited the employee to the minimum pay in lieu of notice as required by the Code.
The Court’s Analysis
In interpreting the termination provision, Justice Chipman cited the recent Ontario Court of Appeal decisions in Waksdale v Swegon North America Inc. and Bertsch v Datastealth Inc. The Court confirmed that employers may enforce an agreement that restricts an employee’s common law rights on termination, but not in a manner that will violate the employee’s rights under the applicable employment standards legislation. Moreover, termination provisions must contain “express language” with a “high level of clarity” to effectively displace an employee’s entitlement to common law notice.
Applying relevant authorities, Justice Chipman determined that subsection (iii) of the termination provision was ambiguous because, for the following reasons, it could be reasonably interpreted as not limiting the employee’s entitlement to reasonable notice of termination at common law:
- The Court noted the lack of a comma in the phrase “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” after the term “(if applicable)”. This could reasonably be read as meaning that the qualifying words “to which you are entitled under the Nova Scotia Standards legislation” applied only to severance pay and not to minimum notice of termination.
- The term “severance pay” does not appear anywhere in the Code – the only payment required upon termination without cause in Nova Scotia is pay in lieu of notice. Accordingly, Justice Chipman opined that the reference to “severance pay” may have been a colloquial way of referring to common law notice.
- The termination clause did not clearly state that statutory minimums under the Code were the “ceiling” of the plaintiff’s entitlement, and thus failed to displace the employee’s entitlement to common law notice.
Accordingly, Justice Chipman concluded that the termination provision did not meet the high standard required to limit an employee’s entitlement to common law notice. The employee was awarded damages based on an eight month notice period for his total compensation during the notice period, which included his base salary, commissions, and benefits (including a car allowance).
The employer’s argument to exclude commissions was rejected, as the specific Sales Incentive Plan referenced in the employee’s initial employment agreement applied only to the 2016 fiscal year and did not unambiguously remove his common law rights for subsequent years.
The plaintiff’s global total compensation was calculated at $80,000 per annum, and he was awarded damages of $53,333 (less amounts already paid).
Key Takeaways
The Court’s decision in Brocklehurst is a good reminder that termination provisions in employment agreements are held to a higher standard of clarity than ordinary contracts and must be drafted with meticulous attention to the applicable employment standards legislation, and proper grammar and punctuation. Employers must critically examine their termination clauses within their employment agreements, and amend them as necessary to ensure there is no ambiguous language.
In most cases, the optimal approach for employers in Canada is to tailor their employment contracts and the termination provisions within those contracts to the specific jurisdiction where the employee is working. Referencing an entitlement to both statutory notice and severance pay upon termination, for example, could result in the termination provision being deemed vague and unenforceable if the employee is employed in a jurisdiction that does not require the payment of statutory severance pay in addition to notice.
From a practical standpoint, this could also create a false expectation on the part of an employee that they will receive an additional severance payment upon termination when an employer has no intention of offering anything beyond the statutory minimum period of notice or pay in lieu. If the employer’s intention is to limit the terminated employees’ common law notice entitlements, the employer should do so explicitly and clearly communicate that statutory entitlements are the maximum amount the employee will receive.
Should you require assistance with drafting your employment agreements, please contact your Hicks Morley lawyer.
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