Termination Clauses – Cautionary Tale of Ambiguity and a Missing Comma

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The recent decision of Brocklehurst v. Micco Companies Limited, 2025 NSSC 192, from the Nova Scotia Supreme Court, serves as an important reminder for employers to use clear and unambiguous language in termination clauses.

 

Termination clauses are a crucial component of a contract within the employment relationship as it outlines what entitlements the employee may be afforded.

 

The plaintiff, Craig Brocklehurst, was employed by Micco Companies Limited as a sales representative for 8.5 years. His employment terms were outlined in a letter of employment, which included a base salary of $36,000 with the potential for higher annual earnings due to commissions, and contained express provisions regarding termination of employment. Brocklehurst was terminated without cause from Micco on June 3, 2024, and was provided with four weeks’ pay in lieu of notice, aligning with the entitlement under the Nova Scotia Labour Standards Code. Micco Companies Limited additionally offered an extra two weeks’ pay if he signed a release, which Brocklehurst did not accept and instead commenced a wrongful dismissal claim.

 

The termination clause at issue reads as follows:

 

“(iii) only such minimum notice of termination, or pay in lieu thereof, and severance pay (if applicable) to which you are entitled under the Nova Scotia Labour Standards legislation.”

 

The court determined that Brocklehurst was wrongfully dismissed and was entitled to eight months’ common law notice. This determination was based on the following criterion:

 

  1. The Nova Scotia Labour Standards Code does not expressly define the term “severance pay” and because it is not defined, the clause can be interpreted in multiple ways.
  2. The lack of comma in the phrase “only such minimum notice of termination, or pay in lieu thereof, and severance pay (if applicable) to which you are entitled to under the Nova Scotia Labour Standards legislation” could be read as applying only to “severance pay” only and not to “minimum notice”.

  3. The clause did not clearly state that statutory minimums were the ceiling, and thus failed to displace common law notice.

 

Key Takeaways for Employers:

 

  1. Employers must critically examine their termination clauses within new employment agreements, and amend as necessary to ensure there is no ambiguous language.
  2. A high level of attention to detail is required when drafting employment agreements. Omitting a comma could change the meaning of the phrase.
  3. If the intention is to limit the terminated employees’ common law notice entitlements, the employer must do so explicitly and clearly communicate that statutory entitlements are the maximum amount the employee may receive.