Labour & Employment Law Blog

Employers Need to Exercise Good Faith in Termination

Zeilikman Law

Zeilikman Law

Case Summary

Before entering into an agreement, a party may wish to reserve the right to unilaterally terminate a contract for whatever reason it sees fit. The party can insert into the contract a carefully worded clause for that purpose (“Termination Clause”), but as the decision in Mohamed v. Information Systems Architects demonstrates, a Termination Clause will only be effective if it is executed in good faith.


The defendant, Information Systems Architects (“ISA”), hired the plaintiff, Mitchum Mohammed (“Mr. Mohamed”), as an Independent Consultant to work on a six-month project with Canadian Tire. ISA’s agreement with Canadian Tire had already specified that no consultant with a criminal record would work on that project without Canadian Tire’s prior consent.

Prior to signing an Independent Consulting Agreement (“Agreement”) with ISA, Mr. Mohamed agreed to undergo a background security check and disclosed to ISA the fact that he had a criminal record from high school. He even reminded ISA of his criminal record the day after he signed the Agreement, but ISA did not pass that information on to Canadian Tire.

Canadian Tire only learned of Mr. Mohamed’s criminal record a month after he had started working there, when it received results of his background security check. Canadian Tire sent Mr. Mohamed home and asked ISA to send another consultant.

In the Agreement, ISA had been careful to insert a Termination Clause permitting it to “replace the Consultant for any reason” if doing so was in “ISA’s best interest.” Relying on the Termination Clause, ISA decided to terminate its Agreement with Mr. Mohamed. ISA did not assign Mr. Mohamed to any of its other consulting projects.

Mr. Mohamed commenced an action against ISA. In a motion for summary judgment, he was awarded fixed-term damages of six months’ pay, i.e. the full amount of what he would have been paid had he been allowed to finish the project with Canadian Tire, plus costs. There was no deduction from his award for mitigation. The motion judge found that ISA had breached its performance of the contract by not using the Termination Claus in good faith. In the alternative, the motion judge ruled that the Termination Clause was void for vagueness.


The Court of Appeal set aside the motion judge’s conclusion that the Termination Clause was vague. Rather, the Court of Appeal found that the Termination Clause was unambiguous in giving ISA a “facially unfettered right to terminate the contract.” Nevertheless, the conclusion that ISA still had an obligation to exercise that “unfettered right” in good faith was upheld. This conclusion was based on the 2014 case of Bhasin v. Hrynew, where the Supreme Court of Canada ruled that parties have a bona fide obligation to perform contracts in good faith.

The Court of Appeal described Mr. Mohamed’s good faith performance and ISA’s lack thereof: Mr. Mohamed had diligently disclosed his criminal record before signing the Agreement and before starting work at Canadian Tire. He had also taken the background security check just as he had been instructed. ISA, on the other hand, did not ask Canadian Tire to allow Mr. Mohamed to complete his work on the project once he had been terminated. ISA did not even attempt to place Mr. Mohamed with any of its other clients.

Finally, the Court of Appeal upheld the motion judge’s finding that fixed-term damages were due. Regardless of Mr. Mohamed’s status as an independent contractor, the Agreement was for a fixed-term and Mr. Mohamed had expected ISA to exercise the Termination Clause in good faith only. Therefore, damages for the breach were based on wages owing for the remainder of the Agreement, and there was no duty to mitigate.


The above discussed ruling is in line with the Supreme Court of Canada’s decision in Bhasin. Parties entering into an Agreement can add clauses to preserve their rights, but there will still always be a duty to act in good faith when performing the contract. Therefore, even if it seems a party was merely exercising its rights under the contract, legal advice should be sought to check if legal recourse remains.

The above article is for general information purposes only, does not constitute legal advice or create a solicitor-client relationship. Because each case is unique and factually driven, if you have concerns with regard to the foregoing issues, please make an appointment with one of our lawyers or a qualified legal practitioner elsewhere. We represent clients in the Greater Toronto Area including Toronto, North York, Markham, Vaughan, Thornhill, Newmarket, Aurora, Brampton, Mississauga, Barrie, Ajax, Whitby, Pickering and Oshawa.

Legal Receptionist

Zeilikman Law is an employment law firm located in Vaughan, Ontario. We are looking to hire a legal receptionist to join our firm. Preference will be given to candidates who have experience working as a receptionist at another law firm.

Location: Vaughan, Ontario.

Start Date: Immediately.

Hours: Monday to Friday, 9 am to 5 pm. Full time. In-person only. This is not a remote work position.

Wages: 35,000 to 40,000 per year.

Duties and Responsibilities:

  • Manage our firm’s multi-line telephone system to receive incoming calls.  Screen incoming telephone call inquiries to determine the nature of the telephone call and provide standard information related to our legal services.  Take and deliver messages and route incoming telephone calls to the appropriate staff person.
  • Answer general inquiries coming from the firm’s social media and website email.
  • Welcome in-person visitors upon arrival.  Direct visitors to the appropriate staff person and / or office or boardroom.
  • Organize in-person visitor schedule to prevent overlap and multiple bookings.
  • Receive, sort, and distribute daily mail and deliveries.
  • Arrange for couriers.
  • Keep front reception, kitchenette area and boardroom tidy.
  • Perform various clerical duties such as filing, photocopying, and faxing on an as-needed basis.
  • Process client or other payments.
  • May be asked to run minor errands outside of office such as attending post office to arrange a courier or pick up mail.
  • May be asked to assist other law clerks or lawyers of the firm as required and as appropriate.
  • Any other basic administrative duties or tasks as deemed appropriate.

Required Skills:

  • Basic knowledge of general office procedures including filing, faxing, and printing and copying.
  • Basic word processing computer skills.
  • Proficient in receptionist and telephone practices, etiquette, and decorum.
  • Professional attitude and appearance.
  • Excellent organizational skills.
  • Positive customer service attitude is a must.
  • Must be able to maintain confidential and sensitive information.

Education and Experience:

  • Highschool diploma or equivalent.
  • 1 – 2 years’ experience in an office setting with an emphasis in accounting, reception or clerical work is required.   We would prefer experience in a law firm environment.

Applications for this position should be sent via email to jennifer@zeilikmanlaw.com. All applications should include a cover letter, resume and at least two references. Only successful candidates will be contacted.