Ambiguity: The Achilles’ Heel of Termination Clauses in Alberta
Termination clauses are among the most litigated provisions in employment contracts. Employers often draft them with the intention of limiting liability, but when the wording is unclear, courts frequently step in to interpret ambiguities in favor of the employee. A recent dispute illustrates how a single phrase can undermine an employer’s attempt to restrict entitlements to the statutory minimum.
At the center of the discussion is a termination clause that ended with the statement:
“It is understood, however, that in no circumstance will the Employee receive less than their entitlements, including payments, under the Employment Standards Code.”
On its face, the clause appears to guarantee compliance with the Employment Standards Code (the “Code”). But this language introduces uncertainty. Section 3 of the Code preserves the application of common law, unless expressly displaced. By affirming that an employee shall not receive “less than their entitlements” under the Code, the clause inadvertently opens the door to common law rights.
Ambiguity in Drafting
Employers may believe they are protecting themselves by anchoring termination entitlements to statutory minimums. Yet, without explicit limiting language, a clause that promises “all entitlements” or uses similar broad terms can be read to include both statutory and common law notice. This creates ambiguity, leaving courts with multiple possible interpretations.
The Supreme Court of Canada in Machtinger v. HOJ Industries Ltd., 1992 CanLII 102 (SCC), [1992] 1 SCR 986 established the principle that, absent clear language, employment contracts are presumed to include common law notice entitlements. This presumption reflects the reality of the power imbalance in the employment relationship.
The Alberta Court of Appeal reaffirmed this principle in Bryant v. Parkland School Division, 2022 ABCA 220, where it stated that uncertainty in employment contracts should be resolved in favor of the employee. Similarly, in Plotnikoff v. Associated Engineering Alberta Ltd., 2024 ABKB 706, Justice Thompson emphasized that ambiguity is construed against the employer, who is the drafter of the contract.
The Contra Proferentem Rule
These decisions are consistent with the long-standing contra proferentem rule, which holds that any ambiguity in a contract will be interpreted against the party who drafted it. In the employment context, this invariably means the employer bears the risk of unclear drafting. Even if the employer’s intent was to limit entitlements to the statutory minimum, a poorly worded clause may have the opposite effect—preserving or even expanding common law rights.
Distinguishing Clear Drafting from Ambiguity
Contrast this with the Ontario case of Li v. Wayfair Canada ULC., 2025 ONSC 2959, where the termination clause explicitly limited entitlements to the minimal statutory amounts required under the Employment Standards Act. The repeated use of the word “minimal” demonstrated a clear intent to restrict liability. Courts are generally willing to uphold such clauses when they are drafted with precision and clarity.
By comparison, the clause promising that an employee will not receive “less than their entitlements” is open-ended. It lacks the restrictive wording seen in Wayfair, leaving room for courts to conclude that common law notice is preserved.
Lessons for Employers
The lesson is straightforward: ambiguity is the Achilles’ heel of termination clauses. Employers seeking to limit termination obligations must draft with unmistakable clarity. Vague assurances of “entitlements” or “payments” may appear benign, but they create fertile ground for litigation.
Employees, on the other hand, stand to benefit from such ambiguity. Courts consistently prefer interpretations that provide greater protection to the employee, particularly where power imbalances exist and statutory minimums represent only a floor, not a ceiling.
Conclusion
Termination clauses live or die on the precision of their wording. While employers may intend to restrict payouts to statutory minimums, the inclusion of broad, undefined terms can undo that intention. As case law demonstrates, where ambiguity exists, the law sides with the employee. For employers, the risk of careless drafting is not just a matter of interpretationit is a matter of liability.
At Osuji & Smith Lawyers, we have experienced lawyers who practice in employment law and broader specialty commercial contracts to help you navigate your employee on-boarding and recruitment documents; including updating existing employee agreements and employment law defenses. We’re just a call away.
Author: Oluwatobi (Tobi) Ibiyemi
