Let’s Be Clear: Simply Referring to Employment Standards Legislation in Termination Clauses Does Not Oust the Common Law.
The court’s message in Bellini v Ausenco Engineering Alberta Inc. is clear: guaranteeing statutory minimums does not automatically have the effect of limiting or ousting common law notice when it comes to termination clauses and reasonable notice of termination without cause. Employers must be abundantly clear when using statutory terms to qualify and limit an employee’s rights upon termination in employment contracts.
Mr. Bellini was a 61-year-old, employed as a senior mechanical engineer for the respondent employer for a period of 3 years. The employer terminated Mr. Bellini’s employment due to economic factors and relied on the termination clause in his employment contract, which read, in part:
If it becomes necessary for us to terminate your employment for any reason other than cause, your entitlement to advance working notice or pay in lieu of such notice, will be in accordance with the provincial employment standards legislation.
The primary issue before Justice Arthur LeBlanc was the interpretation of the termination clause, and in particular, the phrase “in accordance with the provincial employment standards legislation”.
Counsel for Mr. Bellini argued that nothing in the clause made it clear that he would be barred from seeking common law damages.
By contrast, counsel for the employer argued that the clause should be interpreted as only guaranteeing Mr. Bellini the minimum statutory notice period as set out by the legislation.
Justice Arthur LeBlanc provided an extensive review of Canadian authorities on the issue of the interpretation of termination clauses and concluded that
The provision in this case is at best ambiguous as to whether the parties intended the statutory minimum to apply, or simply whether the applicable notice would be consistent with the legislation. It would not be difficult for an employer to draft a termination clause that leaves no doubt as to the parties’ intention to oust common law notice. This language does not do that.
In assessing the appropriate common law notice period, Justice LeBlanc reviewed the authorities and reiterated that the ‘rule of thumb’ (one month for every year of employment) does not apply when calculating the notice period. Rather, each case must be analyzed on its individual facts; that is, he maintained, the true essence of the Bardal factors. Justice LeBlanc held that the economic downturn and low availability of other similar employment was the primary factor in establishing a notice period of six (6) months– and was even more important than the fact that the employee was 61 years old.
If you have, or are contemplating entering into an employment contract that refers to provincial statutory legislation to qualify your rights upon termination, or have been terminated and your employer is attempting to rely on the termination provisions in your contract, get in touch with a member of our Executive Employment Group.
Michael Winterstein is grateful for the assistance of articling student, Lesley Campbell, in preparing this blog.
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