The recent decision of Steele v. The Corporation of the City of Barrie, 2022 ONSC 7245, serves as welcome refresher of the considerations around the use of fixed term contracts, as opposed to contracts of indefinite employment. In brief, fixed term contracts should only be used where there is genuine need to do so, rather than to limit or even avoid the termination and severance obligations under the Employment Standards Act, 2000 (“ESA”).
Furthermore, where a fixed term contract goes beyond 12 months, Ontario Regulation 288/01 provides that notice of termination will be payable. If the contract is then extended, the extension should be clear and unambiguous, while confirming the temporary nature thereof. Lastly, any extension should occur before the end of the fixed term period, in order to mitigate against any argument that the employment relationship has become indefinite.
