Employers defending termination clauses should resist the reflexive argument that any post-termination underpayment automatically voids the clause. That is not the law. Where a termination provision is clear, Employment Standards Code compliant, and effective to displace common law notice, a later failure to pay the full contractual amount is generally treated as a breach of contract, not as a ground to invalidate an otherwise enforceable clause. The employee’s remedy is ordinarily compensatory: damages sufficient to place them in the position they would have been had the contract been performed. That analysis is fundamentally different from cases in which the clause itself is illegal, ambiguous, or capable of contracting out of statutory minimum standards.
That distinction is supported by Egan v. Harbour Air Seaplanes LLP, 2024 BCCA 222. There, the British Columbia Court of Appeal confirmed that “an employer's failure to comply with a contractual notice requirement does not render a termination clause unenforceable; it constitutes a breach of contract. What flows from that is not a finding that the contract is void but rather a measure of damages for the breach.” In other words, once a clause validly rebuts common law notice and complies with minimum standards legislation, the focus shifts from enforceability to performance. Egan offers an answer to the proposition that every payment error destroys a clause.
The Alberta Court of King’s Bench expressly adopted that reasoning in Singh v. Clark Builders, 2025 ABKB 3. At paragraph 160, the Court preferred the approach in Egan and held that Clark’s failure to immediately pay the contractual notice amount did not amount to repudiation and did not invalidate the termination clause. Instead, the issue was one of contractual compliance, assessed in the context of a genuine just-cause dispute and ongoing settlement discussions. For Alberta employers, Singh is significant: it confirms that imperfect performance after termination does not necessarily strip an employer of the benefit of an otherwise valid termination provision.
Taken together, Singh and Egan make an important point: courts do not automatically collapse the distinction between an unenforceable clause and a breach of an enforceable one. That distinction matters. If the clause is valid, the legal question is usually whether the employer performed it properly and, if not, what damages are owed. In many cases, the answer is not common law reasonable notice, but payment of the contractual shortfall.
That said, the employer-side argument succeeds only if the clause is sound in the first place. Where the termination provision is ambiguous or unlawful, the analysis changes entirely. Alberta courts have repeatedly held that termination clauses must clearly and unequivocally rebut the presumption of common law reasonable notice. In Holm v. AGAT Laboratories Ltd., 2018 ABCA 23, the Alberta Court of Appeal declined to enforce a clause because its language did not clearly limit the employee to Employment Standards Code minimum entitlements. Likewise, in Bryant v. Parkland School Division, 2022 ABCA 220, the Court held that the provision was not sufficiently clear and unambiguous to displace common law notice. In both cases, the ambiguity was construed against the employer, with the result that common law reasonable notice applied.
The same is true where the termination scheme contains an illegal for-cause provision. In Waksdale v. Swegon North America Inc., 2020 ONCA 391, the Ontario Court of Appeal held that termination provisions must be read together. Although the employee in that case was dismissed without cause under a provision that was facially compliant, the agreement also contained a with-cause provision that violated employment standards legislation. Because the illegal provision formed part of the same termination scheme, the entire scheme was unenforceable, and the employee became entitled to common law reasonable notice. Waksdale remains a useful reminder that enforceability is determined first by the text of the agreement, not by whether the employer later wishes to rely on only the compliant parts.
Takeaway
The stronger view is that underpayment alone should not do the work of invalidity. If a termination clause is otherwise clear, unambiguous, and Employment Standards Code compliant, courts may treat a payment failure as what it is: a breach of contract, remediable in damages. That approach preserves the distinction between defective drafting and defective performance and avoids converting every termination-payment dispute into a common law notice case. For employers, the lesson is that a well-drafted clause still matters, and when the clause is enforceable, a payment misstep may create liability for the shortfall without opening the door to common law reasonable-notice damages.
Heela Selemankhel
Associate
h.selemankhel@svrlawyers.com