After a great run with the Toronto Maple Leafs the team let the media know on May 9th that Sheldon Keefe had been relieved of duties. At the time Keefe was one of the longest serving coaches in the NHL and had a very high regular season win percentage, leading the Maple Leafs to many highlights, and post-seasons. However, in his parting message, Sheldon Keefe noted he understood the decision based on not a Stanley Cup and the struggles in the post-season playoffs.
Thanks to Sheldon Keefe for all his work, and looking forward to meeting the next coach.
But what does this mean from an employment law perspective? Especially given that Sheldon Keefe was terminated prior to his starting his new two year fixed term employment extension?
The recent dismissal of Sheldon Keefe from his role as the head coach of the Toronto Maple Leafs, even before the commencement of his fixed-term contract, raises significant questions under Ontario employment law.
This incident draws parallels with landmark cases like Benson Group Inc. and Goss Power Products Ltd., offering a window into the complexities of fixed-term employment contracts and the rights of employees therein. This blog post explores the intricacies of Keefe’s contract situation, compares it with relevant legal precedents, and delves into the potential implications of his dismissal under current employment laws.
The Basics of Fixed-Term Contracts
Fixed-term contracts are explicit agreements between an employer and an employee that last for a specified period. These contracts automatically terminate at the end of the term without the need for notice. The pivotal advantage for employers in these agreements lies in their clarity and predefined duration, which can align with project durations or specific objectives. However, the challenge arises when there is an attempt to terminate such a contract prematurely without a predefined clause allowing for such action.
The Legal Precedents
In the landmark decision of Benson Group Inc. <https://canlii.ca/t/gp8v7> (2016 ONCA 256), the Ontario Court of Appeal set a crucial precedent. The court ruled that if a fixed-term employment contract does not contain an enforceable clause for early termination without cause, the employer is liable for the remainder of the contract term. This means the employee is entitled to the compensation they would have received had the contract reached its natural conclusion, without the duty to mitigate these damages by seeking new employment.
Similarly, in Goss Power Products Ltd. , <https://canlii.ca/t/frsgc>, (2012 ONCA 425), the court upheld that the duty to mitigate losses does not apply when the employment contract specifies a fixed term of notice or payment in lieu. This principle reinforces the protection employees enjoy under fixed-term contracts, emphasizing the need for clear terms regarding early termination.
The Case of Sheldon Keefe
Sheldon Keefe was dismissed from his position prematurely, under a contract that was fixed-term by nature. Drawing from the specifics revealed in public records and assuming typical clauses in coaching contracts in professional sports, if no specific clause allowed the Maple Leafs to terminate the contract without cause, then under principles established in Benson, Keefe would be entitled to the salary and any benefits for the remaining term of his contract even if he is not working. This entitlement would remain, regardless of whether he secures another coaching position.
It may even be that depending on the application of Ontario law, and the Benson case, that Sheldon Keefe might be entitled to the payment until the end of the term of his contract even if he gets another job. This is what happened in the Benson and Goss Power cases.
However, this can be contracted out of, and many coaching contracts include clauses that offset any remaining salary due by any income the coach earns from another job within the term of the original contract. So, depending on if that clause is valid, Sheldon Keefe might stop getting payments from the Maple Leafs if he gets a new job before the two years are up.
But, if like in the Benson case the clause is unclear, he might be able to ‘double up’ working someplace else. There could also be internal NHL rules which might prevent coaches from receiving double payments.
The Importance of Contract Clauses
The Keefe situation underscores the importance of explicitly detailing the terms of early termination in fixed-term contracts. Ambiguities in contract language can lead to disputes and potential liabilities, as seen in the Benson case where the court found the termination clause unenforceable due to its vagueness.
Conclusion
The termination of Sheldon Keefe’s contract with the Toronto Maple Leafs, if challenged, could lead to significant financial implications for the organization under the principles set forth by Benson. This case serves as a reminder of the stringent requirements for drafting enforceable termination clauses in fixed-term contracts and the protections they afford to employees. While the specifics of Keefe’s contract are not publicly disclosed, the general principles of law suggest that unless there was a clear, enforceable agreement to the contrary, Keefe may well have a right to claim compensation for the unexpired term of his contract, reflecting the full value of the agreement minus any mitigated earnings. This scenario exemplifies the potential risks organizations face when entering into fixed-term contracts without meticulous attention to legal details and the possible financial obligations that can arise from premature terminations.
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