eCaseNote 2011 No. 06

Repeated fixed‐term employment contracts do not necessarily lead to “indefinite term employee” status

Van Mensel v. Walpole Island First Nation 2010 ONSC 6463

The Ontario Superior Court of Justice has released a ruling that provides some insight into repeated fixed‐term employment contracts. While courts generally look for ambiguities in these contracts and interpret them strictly against the employer’s interests, carefully drafted contracts can be used to hire independent contractors for repeated terms without making them indefinite term employees.  

Van Mensel worked for 11 years at a school for the Walpole Island First Nation (“Walpole”). Her employment was subject to fixed‐term contracts which ran during the school term each year from September to June of the following year. Van Mensel would prepare a “proposal” each year containing the same fixed term of employment. The proposals were all negotiated except for the fixed‐term. 

  Instead of hiring Van Mensel for a 12th year, Walpole decided to make her position permanent. Under their employment policy, Walpole tendered the new position with preference given to aboriginal applicants. Van Mensel applied to court and took the position that the repeated contracts effectively made her an employee and that she was entitled to notice of termination.   The court found for Walpole and stated that the contracts had no ambiguities that the court could interpret in Van Mensel’s interest and made the following observations to support this finding:

  1. Each contract was clear and unambiguous;
  2. The contracts did not contemplate any renewal of employment;
  3. There was no appraisal process contemplated in the contracts or undertaken by Walpole that could raise a potential basis for a suggestion of “permanent employment”;
  4. The term of each contract was clearly the school year only and Van Mensel was not paid over a 12 month period as were all of Walpole’s other employees;
  5. Walpole’s employment policy stated that aboriginals were given priority and non-aboriginals could only be hired on a “term” contract basis; and
  6. Most significantly, Van Mensel was uncertain that her contract would be renewed each following school year.

This case suggests that Ontario courts are willing to uphold repeated fixed‐term contracts with independent contractors. However, this case should be seen as the exception and not the rule. In order to have a fixed‐term contract interpreted as such, it must be very clear and unambiguous. Re‐negotiation of the contract after each employment term could assist the courts in upholding the contracts as being limited term. The underlying nature of the employment relationship must be that the worker is an independent contractor, not an indefinite‐term employee, and he or she must be treated as such. Further, the observations made by the court should be kept in mind. It is most important to remember that simply labeling an indefinite term employee as a fixed‐term independent contractor will not lead to this result.  

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