Employment Agreement (Fixed Term) (Ontario) by OLL
This template establishes a fixed-term employment relationship in Ontario, Canada, for a role with a specific end date. It includes critical early-termination clauses designed to protect the employer from paying out the entire balance of the contract's term if the relationship ends early.
This document comes from OLL's library of vetted legal templates
EMPLOYMENT AGREEMENT [FIXED TERM]
This template is for the direct employment of an individual in Ontario for a defined term with a stated end date. It is employer-side: drafted to be offered by the Employer. This is not the indefinite-term template with an end date added — the early-termination exposure described below is unique to a fixed term and is the reason this template exists separately. Not suitable for an independent contractor engagement (use independent-contractor-services), an indefinite role (use employment-full-time-indefinite), or a part-time role (use employment-part-time, which can itself be adapted to a fixed term if both apply — do not combine without legal review). Not suitable for use in Quebec.
Drafting notes appear in italics and are to be deleted before execution. Square brackets mark information to be filled in. Delete any inapplicable optional clauses and renumber before execution.
⚠️ Ending a fixed term early without an enforceable clause can cost more than terminating an indefinite employee. At common law, a fixed-term employment contract is treated like any other fixed-term contract: if the Employer ends it before the stated end date without an enforceable early-termination clause, the default remedy is not reasonable notice — it is damages equal to the wages and benefits the Employee would have received for the entire remaining balance of the term, and Ontario appellate authority commonly cited for this proposition (Howard v. Benson Group Inc., 2016 ONCA 256, not independently verified in this template — VERIFY before relying on it) has been read as denying the Employer even the benefit of the Employee's duty to mitigate (find replacement work) unless the Agreement expressly says otherwise. A two-year fixed term ended in month three, with no valid early-termination clause, can expose the Employer to roughly twenty-one months of wages and benefits — far more than the statutory or common-law notice an indefinite employee in the same role would receive. Section 13 exists to prevent that outcome, but it only works if it is itself enforceable — see the next warning.
⚠️ This area of law is enforceability-volatile. The early-termination clause in section 13 must independently satisfy the Employment Standards Act, 2000 (the "ESA") minimums at every point across the term. Ontario courts read a termination clause as a single scheme: if any provision anywhere in that scheme falls below the ESA floor, the entire termination clause is void, including the parts that comply on their own, and a severability clause does not rescue it (Waksdale v. Swegon North America Inc., 2020 ONCA 391, leave to appeal to the SCC denied). For a fixed-term agreement, voiding the clause is worse than for an indefinite one: instead of falling back to common-law reasonable notice (Machtinger v. HOJ Industries Ltd., [1992] 3 S.C.R. 1086), the Employee may fall back to damages for the balance of the term described above. Section 13 is drafted to track the current statutory floor rather than hard-coding numbers, but the case law keeps moving. Have it checked again before each significant use, and always before a term extending more than a year.
⚠️ Existing employees need fresh consideration. If this Agreement is being introduced to someone who is already employed, or an existing indefinite employee is being moved onto a fixed term, Canadian courts generally require the Employer to give the employee something of genuine value in exchange. Also note: moving an existing indefinite employee onto a fixed term is itself a significant change that may carry its own constructive-dismissal risk, separate from the consideration issue. Take advice before doing this.
THIS AGREEMENT is made as of [Date].
BETWEEN:
[Employer Legal Name], [a corporation incorporated under the laws of [Province / Canada] / a sole proprietorship / a partnership] having its principal place of business at [Employer Address]
(the "Employer")
— and —
[Employee Legal Name] of [Employee Address]
(the "Employee")
(each a "Party" and together the "Parties")
WHEREAS the Employer wishes to employ the Employee for a fixed term, and the Employee has agreed to accept that employment on the terms set out below;
NOW THEREFORE in consideration of the mutual covenants below, the Parties agree as follows:
Position and Duties
The Employer employs the Employee in the position of [Job Title], reporting to [Title of Manager].
The Employee will perform the duties normally associated with the position of [Job Title], and any other duties reasonably assigned by the Employer from time to time, consistent with the Employee's skill and experience.
The Employee will devote their full working time and attention to the Employer's business and will not, without the Employer's prior written consent, engage in any other employment or business activity that conflicts with the Employee's duties to the Employer.
The Employee represents that entering into this Agreement and performing their duties will not breach any agreement or obligation the Employee owes to a third party.
Term, Renewal and Non-Renewal
This Agreement begins on [Start Date] and ends on [End Date] (the "Term"), unless terminated earlier in accordance with section 13.
On the last day of the Term, the Employee's employment ends automatically, without any further notice, pay in lieu of notice, or severance pay, except any amount already earned and unpaid. Neither Party is required to provide notice of an intention not to renew.
Include if renewal is contemplated: The Parties may agree to renew this Agreement, or enter into a new fixed-term agreement, for a further term on terms to be agreed. Either Party may notify the other in writing, at least [Number] days before the end of the Term, of its intention not to offer or accept a renewal. Neither Party is obligated to offer or accept a renewal.
A pattern of repeated, back-to-back renewals or successive fixed-term agreements between the Parties, particularly where the work performed is ongoing rather than genuinely time-limited, may cause a court — or, for certain repeated or consecutive assignments, the ESA itself — to treat the relationship as indefinite rather than fixed-term, regardless of how the Parties have labelled it. If that happens, an eventual non-renewal may be treated as a termination requiring notice under section 13, and clause 2.2 will not protect the Employer.
Clause 2.2 is doing important work: it is what allows a true, one-off fixed term to end without triggering a termination-notice obligation at all. That protection depends entirely on the Term being genuinely fixed and not, in substance, an indefinite relationship dressed up as a series of terms — see clause 2.4.
This is a real and recurring trap, but there is no settled bright-line number of renewals or cumulative duration that converts a fixed-term relationship into an indefinite one — it is fact-specific. Do NOT tell an Employer "you are safe up to renewal number [X]." If the Employer is contemplating a second or subsequent renewal of the same Employee, or the role has become ongoing rather than genuinely time-limited, flag this clause and recommend a review before proceeding, and consider whether an indefinite-term agreement is now the more honest instrument.
Hours of Work
The Employee's standard hours of work are [Number] hours per week, ordinarily scheduled as [Schedule], subject to the reasonable requirements of the position.
The Employee [is / is not] eligible for overtime pay under the ESA. Where eligible, overtime is paid in accordance with the ESA and the Employer's overtime policy.
Compensation
The Employer will pay the Employee a base salary of [Amount] per [year / month], payable [bi-weekly / semi-monthly / monthly], less applicable statutory deductions and withholdings.
Include if a discretionary bonus applies: The Employee may be eligible for a discretionary bonus of up to [Amount / Percentage], subject to the Employer's bonus plan then in effect and the Employee being actively employed and not under notice of termination on the payment date. The Employer may amend or discontinue the bonus plan at its discretion.
Vacation and Public Holidays
The Employee is entitled to [Number] weeks of paid vacation per year / the minimum vacation entitlement required by the ESA, whichever is greater, pro-rated for any partial year within the Term. Vacation pay is calculated in accordance with the ESA.
The Employee is entitled to public holiday pay in accordance with the ESA for each public holiday recognized under the ESA on which the Employee does not work.
VERIFY the current ESA vacation-pay formula before publishing.
Benefits
Include if the Employer offers group benefits: The Employee is eligible to participate in the Employer's group benefits plan, as it exists from time to time, subject to the terms of the plan and the approval of the insurer. Coverage ends on the earlier of the end of the Term and the end of employment under section 13, subject to any minimum continuation required by the ESA. The Employer may amend, replace or discontinue the plan at its discretion.
Business Expenses
The Employer will reimburse the Employee for reasonable, pre-approved business expenses properly incurred in performing the Employee's duties, on production of receipts and in accordance with the Employer's expense policy.
Workplace Policies
The Employee will comply with the Employer's policies and procedures, as amended from time to time and made available to the Employee. In the event of a conflict between a policy and this Agreement, this Agreement governs.
Include if the Employer has 25 or more employees: The Employer maintains a written policy on disconnecting from work as required by the ESA.
VERIFY the current employee-count threshold before stating clause 8.2 applies.
Confidentiality
"Confidential Information" means non-public information relating to the Employer's business that the Employee acquires in the course of employment, whether or not marked confidential, including business plans, customer and supplier information, pricing, technical information and personal information about the Employer's employees, customers or suppliers.
The Employee will keep Confidential Information confidential both during and after employment, use it only to perform their duties, and not disclose it to any third party without the Employer's prior written consent, except as required by law.
Section 9.2 does not apply to information that is or becomes public through no fault of the Employee, or that the Employee is required to disclose by law or by a court or regulator — provided the Employee gives the Employer prompt notice where lawful to do so.
Intellectual Property
All work product, inventions, designs, code, documents and other materials created by the Employee within the scope of their employment (the "Work Product") are owned by the Employer.
To the extent any Work Product is not automatically owned by the Employer by operation of law, the Employee assigns to the Employer all right, title and interest in it, including all copyright, effective on creation.
The Employee waives, in favour of the Employer and anyone claiming through the Employer, all moral rights in the Work Product.
Non-Solicitation
During employment and for [Number] months after the end of employment for any reason, the Employee will not directly solicit any employee of the Employer with whom the Employee had material contact during the last [Number] months of employment, for the purpose of employment elsewhere.
During employment and for [Number] months after the end of employment for any reason, the Employee will not directly solicit any customer of the Employer with whom the Employee had material contact during the last [Number] months of employment, for the purpose of providing services competitive with those of the Employer.
Section 11.2 does not prevent the Employee from responding to a general advertisement not directed at the Employer's customers.
This Agreement contains no clause restricting the Employee from working for, or starting, a competing business after employment ends. Under the ESA (as amended by the Working for Workers Act, 2021), a clause of that kind is void against a non-executive employee in Ontario, subject to a narrow exception this template does not use. Do not add that kind of clause to this section.
Keep the scope, duration and definition of "material contact" narrow and tailored to the actual role. An unreasonably broad non-solicitation clause risks being read, and struck down, as an unlawful restriction on the Employee's ability to earn a living elsewhere.
Return of Property
On the end of employment for any reason, or earlier on request, the Employee will return all property, equipment, documents and Confidential Information belonging to the Employer, and permanently delete any copies in the Employee's possession or control that cannot be physically returned.
Early Termination
Early Termination by the Employer Without Cause
Option A — ESA minimum only
The Employer may terminate the Employee's employment before the End Date, at any time and without cause, on providing the Employee with the minimum notice of termination, or pay in lieu of notice, and severance pay (if applicable), required under the ESA, calculated based on the Employee's length of service as of the date notice is given. During the statutory notice period, the Employer will continue the Employee's participation in any benefit plan required to be continued under the ESA. This section is a complete statement of the Employee's entitlement on early termination without cause and, to the extent permitted by law, is intended to displace any claim to wages, salary or benefits for the remaining, unexpired portion of the Term. This Agreement provides no greater entitlement on early termination without cause than the ESA requires.
Option B — Enhanced contractual notice
The Employer may terminate the Employee's employment before the End Date, at any time and without cause, on providing the Employee with the greater of (a) [Number] weeks'/months' written notice, or pay in lieu of notice, and (b) the minimum notice of termination, or pay in lieu of notice, and severance pay (if applicable), required under the ESA, calculated based on the Employee's length of service as of the date notice is given. During the applicable notice period, the Employer will continue the Employee's participation in any benefit plan required to be continued under the ESA for at least the statutory notice period. This section is a complete statement of the Employee's entitlement on early termination without cause and, to the extent permitted by law, is intended to displace any claim to wages, salary or benefits for the remaining, unexpired portion of the Term.
In no event will the Employee receive, on early termination without cause, less than the Employee's minimum entitlements under the ESA.
Early Termination by the Employer for Cause
The Employer may terminate the Employee's employment before the End Date, at any time, without notice, pay in lieu of notice, or severance pay, for cause.
For the purposes of this section, "cause" means conduct that constitutes wilful misconduct, disobedience, or wilful neglect of duty that is not trivial and has not been condoned by the Employer, as that standard is defined under the ESA and its regulations.
Resignation by the Employee
The Employee may resign before the End Date on providing the Employer with [Number] weeks' written notice. The Employer may, at its discretion, accept the resignation effective immediately or at any point during the notice period, with pay in lieu of the remainder of the notice period, or may require the Employee to work through all or part of the notice period.
Constructive Dismissal
A significant, unilateral change by the Employer to a fundamental term of the Employee's employment — including compensation, position, reporting line, or work location — may, at common law, be treated as an early termination of the Employee's employment by the Employer, regardless of the Employer's characterization of the change, and may expose the Employer to the same balance-of-term risk described in the warnings above. Nothing in this Agreement is intended to authorize such a change.
Effect of Termination
On the end of employment for any reason, the Employer will pay the Employee all wages, accrued and unused vacation pay, and any other amount earned up to the date employment ends, together with any amount owing under section 13.1 or 13.3, as applicable.
Sections 9, 10, 11 and 15 survive the end of employment.
Section 2.2 already handles the ordinary end of the Term. This section deals only with ending the employment relationship BEFORE the End Date. Read the warnings at the top of this template before completing this section — it is the highest-stakes drafting in this document.
Use Option A if the Employer wants the Employee's early-termination entitlement capped at the ESA minimums. Use Option B if the Employer wants to offer a fixed, enhanced contractual notice period instead. Delete whichever option does not apply, and renumber.
The "displacement" language in clause 13.1 is the entire point of this section — without it, or if it is found unenforceable, the Employee's fallback claim is not the ESA minimum but damages for the balance of the Term (see the warning at the top of this template). Confirm, before every use, that the chosen option does not fall below the ESA minimum for ANY point across the Term, including very late in the Term where the remaining balance may sometimes be less than the notice this clause promises — an inconsistency between the two is itself a source of enforceability risk. This is a genuine drafting trap specific to fixed-term agreements and is not resolved by simply copying the indefinite-term clause.
VERIFY the current regulatory wording (O. Reg. 288/01) before relying on clause 13.3.2 in a specific dismissal. This ESA standard is narrower than common-law just cause, and it is unresolved here whether a valid finding of common-law just cause alone is sufficient to avoid a balance-of-term damages claim in the fixed-term context to the same extent it avoids common-law reasonable notice in the indefinite-term context — flag this to counsel if a for-cause dismissal is contemplated.
Check the surviving-section list against the final numbering after optional clauses are deleted.
Notices
Notices under this Agreement must be in writing and delivered to the address set out above, or to any other address a Party notifies in writing. Notice is deemed received on delivery if delivered personally or by email, or [Number] business days after mailing if sent by prepaid mail.
General
This Agreement is governed by the laws of the Province of Ontario and the federal laws of Canada applicable in Ontario. The Parties attorn to the exclusive jurisdiction of the courts of Ontario.
This Agreement is the entire agreement between the Parties relating to the Employee's employment and supersedes all prior discussions, negotiations and agreements, whether written or oral, relating to that subject matter.
No amendment to this Agreement is effective unless in writing and signed by both Parties. Continued employment following a proposed amendment is not, by itself, acceptance of that amendment.
A failure or delay by a Party in exercising a right under this Agreement is not a waiver of that right.
If a provision of this Agreement, other than a provision within section 13, is held unenforceable, it is severed and the remainder of this Agreement continues in force.
This Agreement may be executed in counterparts and delivered electronically, each of which is an original and all of which together form one agreement.
Clause 15.5 deliberately excludes section 13 from the general severability clause. Under Waksdale, a severability clause does not rescue an ESA-offside termination scheme, and for a fixed-term agreement the consequence of that failure is the balance-of-term exposure described above — do not extend clause 15.5 to section 13.
IN WITNESS WHEREOF the Parties have executed this Agreement as of the date first written above.
[Employer Legal Name] | [Employee Legal Name] |
Per: ______________________ | Signature: ______________________ |
Name: [Name] | Name: [Name] |
Title: [Title] | |
I have authority to bind the Employer. |
Schedule A — Key Terms Summary
Complete this Schedule before execution. In case of conflict with the body of this Agreement, this Schedule is for reference only and does not override the body — resolve any conflict by correcting the Schedule to match the body.
Position: [Job Title]
Reports to: [Title of Manager]
Term: [Start Date] to [End Date]
Renewal contemplated: [Yes / No] — if yes, non-renewal notice: [Number] days
Standard hours per week: [Number]
Primary work location: [Address / Remote / Hybrid]
Base salary: [Amount] per [year / month]
Vacation entitlement: [Number] weeks per year
Early-termination notice option selected: [Option A — ESA minimum only / Option B — Enhanced: [Number] weeks/months]
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