A recent decision of the Ontario Court of Appeal (which the Supreme Court of Canada has declined to reconsider) highlights the danger of using fixed term employment contracts.  The employee was hired for a 5 year term pursuant to a written employment agreement.  The agreement also stated that “Employment may be terminated at any time and the amounts paid to the employee shall be in accordance with the Employment Standards Act”.  After 23 months, the employee was fired and paid two weeks’ severance in accordance with the Employment Standards Act.  The judge found the termination provision ambiguous, and ambiguity in an employment agreement is always construed against the employer.  The Court of Appeal agreed, and confirmed that the employee was entitled to be paid for the remainder of the 5 year term (a hit to the employer of $180,000, not including the legal fees of the case!).  If you use fixed term employment agreements, it is strongly recommended that the terms be precise and carefully drafted.

Many businesses require their customers to sign a waiver to release the business from liability for certain claims.  A recent court case upheld the validity of a fitness club’s waiver, and highlighted some of the issues that affect their validity.  A customer of the fitness club injured her shoulder and claimed the injury was due to a defective shoulder press machine.   She alleged that the waiver she signed was invalid because its legal effect was not explained to her.  The waiver was in capital letters (while the rest of the contract was not) and the customer initialed the clause.  The court confirmed that, as a general rule, if a person signs a contract without reading it, they are still bound by its terms, unless there has been fraud, misrepresentation or a very onerous term that you wouldn’t expect to be in it.  The court also found that a waiver will not protect a business from claims for negligence, unless that is clearly stated, as it was in this case.  While the waiver was upheld, it is also prudent for a business to have liability insurance, and to be incorporated to protect the owners from personal liability.

BC Introduces Franchises Act

October 2015

BC is set to become the 6^th province to regulate the franchise industry.  The Franchises Act was introduced in the legislature on October 5.  Once adopted, franchisors will be required to provide franchisees with a Franchise Disclosure Document (FDD) at least 14 days before a franchise agreement is signed.  BC’s legislation appears to be more business-friendly than in some other provinces.  For example, franchisors can require franchisees to sign confidentiality agreements and provide refundable deposits when they receive the FDD. Franchisors who operate in any of the existing regulated provinces will find it easy to comply with the BC Act.  BC franchisees will benefit from improved access to information and remedies.