On July 13, the Superior Court of Québec ordered the reinstatement of an employee who thought he had a job for life. His employer was the Just For Laughs group, which went on to file for bankruptcy in March 2024. Does employment law allow for lifetime employment contracts? Let’s take a closer look.
Our story begins in 1993, when André Gloutnay joined Just For Laughs as an archivist. Eleven years later, Gilbert Rozon, then-president of Just For Laughs, offered Gloutnay an employment contract for life. In exchange for this contract, Gloutnay agreed that Rozon would become the owner of his archive collections.
Things got thornier after Rozon quit in 2017: Just For Laughs laid off Gloutnay despite the lifetime job guarantee he thought he had. Gloutnay challenged the layoff before the Superior Court of Québec, which ruled that the lifetime contract was valid and ordered that Gloutnay be reinstated.
Just For Laughs took the case before the Court of Appeal of Québec. In February, the Court of Appeal confirmed that Gloutnay’s lifetime contract was valid, but ruled against his reinstatement. Instead, the Court proposed that Just for Laughs compensate Gloutnay for lost wages until retirement.
Can a “lifetime” employment contract be terminated?
Under employment law, contracts can be for a fixed or indeterminate term. An employer can end an indeterminate contract, even without having a disciplinary or performance-related reason for doing so. This is called terminating the employment contract. However, the employer must give reasonable notice of termination, or pay the employee compensation that is equivalent to their salary for the period of the notice.
Meanwhile, employment contracts with a fixed term cannot be terminated before their end date without a serious reason. If an employer does so anyway, they must compensate the employee for any losses. This means that in addition to paying the employee his lost wages, the employer may also have to pay damages.
Lifetime employment contracts don’t fall into either of these categories. By law, employees under such contracts can quit whenever they like. However, employers have more restrictions: they cannot terminate the contract, nor can they prevent an employee from quitting. That’s what happened here: Just For Laughs had to uphold its commitment until Gloutnay hit retirement age.
Employee’s reinstatement
This situation was an opportunity for the court to rule on employee reinstatement, and specifically on whether an employer can be ordered to reinstate an employee within the company, if the employee had been laid off despite being under a lifetime contract.
The Court of Appeal concluded that an employee under a lifetime employment contract cannot be reinstated in every case. A court must weigh several factors when determining if a business should retain an employee in a different position: the fact that the employer is a corporation with its own rights and responsibilities, the size of the business and the employee’s duties.
Here, the Court of Appeal ruled against reinstatement in another position because Gloutnay had been hired in a specific position for his unique personal skills and encyclopedic knowledge.
What about compensation?
This question inevitably comes up in the judgment. Since reinstatement wasn’t an option, the Court instead ordered that Gloutnay be compensated for the wages he stood to lose between his layoff and his planned retirement. The Court determined that this amounted to 10.75 years of wages, for a total compensation of $660,500.