Employment Termination Clauses: Lessons From Singh v Clark Builders

Written By Matt Riskin, Michael VanderMeer, Lauren Peebles and Homa Aminnejad

In a recent decision, the Court of King’s Bench of Alberta upheld a freely negotiated termination clause with a sophisticated employee despite evolution to the employee’s role over the term of employment. The employee’s experience and involvement in the negotiations may also be used to resolve any apparent ambiguity in the termination clause. 

In Singh v Clark Builders, 2025 ABKB 3,¹ the Court upheld a termination clause limiting the employee’s notice entitlement to 90 days, despite the employee's promotion from Vice President to Chief Operating Officer.

Key Facts and The Termination Clause

Mr. Singh, a seasoned executive, was recruited by Clark Builders (the Company) after nearly a year of negotiations. After rejecting multiple earlier offers, Mr. Singh signed an Offer of Employment and a separate contract, which he personally negotiated. The termination clause he proposed, and was accepted by the Company, specified a 90-day notice period for termination without cause. This replaced the Company’s standard provision which limited employees to Employment Standards Code minimums.

The termination clause provided that the Company could terminate Mr. Singh’s employment for just cause or “[b]y providing [Mr. Singh] with notice of termination, or pay in leu [sic] of such notice in accordance with notice provisions as described in the Offer of Employment letter dated 09/05/2013.”² The Offer of Employment letter stated that Mr. Singh would have a 90-day notice period.

Freely Negotiated and Unambiguous

Mr. Singh argued that the termination clause should be found to be unenforceable and interpreted in his favour both because it was ambiguous and also because it would be unfair to enforce it given how significantly his role with the Company had changed (known as the changed substratum doctrine).

Mr. Singh claimed that the termination provision only created a minimum entitlement and meant he was entitled to at least 90 days’ notice or pay in lieu thereof. The Court disagreed and upheld the termination clause as clear and unambiguous to limit Mr. Singh’s entitlement at 90 days’ notice or pay in lieu of.

The Court highlighted Mr. Singh’s experience as a seasoned executive with substantial bargaining power and a strong grasp of contract terms. It pointed out that Mr. Singh had personally modified the Company’s standard form contract, including the termination clause, during negotiations. The Court recognized that although it could not reimagine the terms of a contract based on one party’s subjective intentions, it could take into account the surrounding circumstances to help discern the objective meaning of the words used. 

During trial, Mr. Singh had argued that his duties and responsibilities had changed overtime such that the terms and conditions of his employment contract should no longer apply (the changed substratum doctrine). However, prior to accepting employment with the Company, Mr. Singh had insisted on a clear promotion path to COO, which was agreed upon from the beginning of his employment. The Court found that Mr. Singh’s career with the Company “proceeded pretty much as intended” and he was ultimately promoted to COO.³ The Court therefore determined that the contract had specifically addressed potential changes in his role and responsibilities, finding no issue with applying the termination provisions to future changes as they were contemplated at the time of contracting. The Court dismissed Mr. Singh’s claim for common law notice and upheld the 90-day termination clause. To our knowledge, Singh has not been appealed at this time.

Key Takeaways for Employers

Assessing the enforceability of a termination provision often involves a technical and fact-specific analysis, and the outcome may be difficult to predict.Singh is notable as it exemplifies the following:

• Negotiation: Courts may be more likely to uphold termination clauses that have been negotiated and drafted by both parties, particularly when the employee is a senior executive with significant contractual sophistication and experience.
• Role Changes: The changed substratum doctrine is unlikely to succeed when a contract expressly contemplates changes in the employee’s title, duties, and responsibilities. For this and other reasons, there is a real advantage to employers in using a customized employment agreement that takes into account potential role evolutions.
• Bargaining Power: Senior executives with significant bargaining power are less likely to benefit from the general principle that contractual ambiguities should be interpreted in favour of the employee. Courts may conclude that such individuals were not at any material disadvantage during bargaining and treat the agreement as if it were made between equal parties.

Termination clauses are of critical importance in employment agreements. Well drafted provisions provide clarity at the outset of the employment relationship as to what each party should expect at the end of the relationship and maximize the chances that such clauses will be upheld in court.

Contact the Bennett Jones Employment Services group to discuss questions about your employment agreements as well as drafting enforceable termination clauses.

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