Repudiation and Losing the Benefits of Termination Clause

A recent Ontario decision provides a warning to employers in British Columbia that their failure to comply with contractual terms could result in a finding by the court that by their actions they have repudiated the contract of employment, with the result that the employer cannot rely on the termination clause in the employment agreement. This was the finding of the Ontario Superior Court in Timmins v. Artisan Cells, 2025 CanLII 2387.

The Timmins case involved the claim of a dismissed Executive Vice-President. Mr. Timmins had been employed by Artisan Cells since 2019 and at the commencement of his employment signed an employment agreement which contained a termination provision. The termination provision in the employment agreement limited his compensation in the event of a without cause termination to the greater of three months’ pay, or his minimum entitlements under the Employment Standards Act. The termination did not suffer the fate of many termination provisions, that being found unenforceable due to noncompliance with statutory minimums or some other contractual irregularity. At the time of Mr. Timmins termination, he was in the process of attempting to negotiate a license from Artisan for their gene editing technology in exchange for a share in a new company that Mr. Timmins would own. After his termination, Artisan Cells refused to negotiate the license unless Mr. Timmins signed a full and final release in exchange for their severance offer. Additionally, Artisan offered a license inferior to the one Mr. Timmins had been negotiating. This brought an end to the negotiations between the parties and Mr. Timmins sued for wrongful dismissal.

The court found that Artisan Cells had “by their correspondence and actions” repudiated the terms of the employment agreement by terminating Mr. Timmins and failing to meet their contractual obligations in payment of severance. As a result of the repudiation, the court found that Mr. Timmins was entitled to common law notice and awarded him damages for the failure to provide nine months’ notice. The court highlighted that repudiation will be found when one of the parties to a contract, by their words or conduct, demonstrates an intention not to be bound by the contract. The court held that Artisan Cells decision to not pay the contractual severance was “a point of leverage” to obtain the proposed release.  The contractual terms did not make the payment of the severance conditional upon Mr. Timmins providing an executed release. Even if it had, the court reasoned that the proposed release was broader than one that could be implied into the Agreement as it included a release from any other claim, a non-disclosure provision and a non-disparagement provision. The court noted that Artisan Cells was seeking a benefit from the release to which they were not entitled under the Agreement.

This decision serves as a warning for employers that if they do not pay terminated employees what they are contractually entitled to when they terminate their employment, they may be found to have repudiated the employment agreement and ordered to pay damages for reasonable notice at common law. While this is an Ontario decision, employers should anticipate similar arguments arising in British Columbia and ensure that compliance with contractual terms occurs when terminating employees.

For more information on this and similar topics, please contact Rose Keith, KC or anyone else from our workplace law team.