May an employer legally terminate a contract, should the planned funding supporting that contract cease to exist?
<p>A Canadian university issues job offers for its post-doctoral fellows according to a template in which one reads:</p>
<blockquote>
<p>This appointment is a term appointment from [date] to [date], and is
funded, at least in part, from funds external to the University’s
general purpose operating budget. <strong>In the event that these funds
cease to be available, your appointment will be terminated.</strong></p>
</blockquote>
<p>What is the rationale behind the legality of this clause? (Assuming that the employee's performance is satisfactory) shouldn't the employer be fully responsible for the salary coverage of his employee in the course of his contract?</p>

<p>Provincial jurisdiction may need to be specified.</p>
<p>But in general, assuming you are not covered by a collective bargaining agreement, you can be terminated for any reason or even no reason, as long as the contract is followed, the actual or apparent reason is not discriminatory or otherwise illegal <strong>and</strong> the termination procedure meets the provincial employment standards.</p>
<p>The labour law usually provide requirements for notice periods or severance pay (or both), unless there exists a just cause (e.g. extreme disregard of duty, theft, repeated insubordination, etc.; lack of funds on the part of the employer is not a just cause).</p>
<blockquote>
<p>shouldn't the employer be fully responsible for the salary coverage of his employee in the course of his contract?</p>
</blockquote>
<p>Yes, but the contract is saying it can be terminated under certain conditions, after which time you are no longer &quot;in the course&quot; of your contract. Termination due to lack of funds is <em>usually</em> not considered discriminatory or otherwise illegal.</p>
<p>You remain entitled to wages for any period you have worked. Additionally, the employer needs to respect the required notice period or severance pay under the provincial employment standards related to termination with or without cause, regardless of the funding situation.</p>

contract-law canada academia