Ambiguous termination clause doesn’t exclude common law notice

Stated notice ‘in accordance’ with legislation but didn’t limit it to minimum: Court
By Jeffrey Smith
|Canadian HR Reporter|Last Updated: 10/17/2016

A termination provision in an employment contract can allow for a notice entitlement in line with employment standards minimums, but the language must be clear in order to circumvent common law reasonable notice entitlements, the Nova Scotia Supreme Court has ruled.

Robert Bellini, 63, was a senior mechanical engineer at PROJEX Technologies, an engineering firm in Halifax. He joined PROJEX on April 12, 2012.

In July 2013, PROJEX was purchased by another company, Ausenco Engineering. Once Ausenco gained control, it gave Bellini a new employment contract with a termination clause. The clause stated “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 contract also recognized seniority from his service under the previous employer.

Bellini was given the opportunity to have independent legal advice and he signed the contract on July 10, 2013, and officially started working for Ausenco 12 days later.

On June 17, 2015, Ausenco terminated Bellini’s employment due to a lack of work. The company paid him all outstanding wages and benefits, as well as an additional two weeks’ salary and health and dental coverage until the end of the month in lieu of notice.

But Bellini sued for wrongful dismissal, seeking damages for breach of his employment contract.

He argued that the contract’s termination provision did not eliminate his right to common law reasonable notice, so he was entitled to more than just the minimum notice under the Nova Scotia Labour Standards Code — which was two weeks for a period of employment “two  years or more but less than five years.”

Contracts must specifically exclude common law notice

The court noted it had been “well-established” that indefinite employment contracts required reasonable notice for dismissal without cause if they didn’t contain express language to the contrary.

It pointed to the Ontario Court of Appeal’s 2012 decision of Bowes v. Boss Power Products Ltd. that stated, “There is a presumption that unless there is an agreement with express language to the contrary, an employee is entitled to reasonable notice of termination.”

Employers and employee can agree to substitute a fixed period of notice displacing the common law reasonable notice period — as long as it doesn’t violate the statutory minimum — but this must be clearly stated in the contract, said the court.

Ausenco argued the termination provision’s existence indicated an intention to contract out of any common law reasonable notice requirement for the minimum outlined in the provincial employment standards legislation, as stated in the contract. The company pointed out that the code stipulates “nothing in this act affects the rights or benefits of an employee under any law, custom, contract or arrangement that are more favourable to him than his rights or benefits under the act,” as long as the minimums were maintained as the floor for such entitlements.

However, the company argued there were no specific terms in Bellini’s contract providing for anything greater than the minimum.

But the court found there was ambiguity in the termination provision of Bellini’s employment contract, which left the door open for common law notice entitlement.

“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,” said the court.

“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.”

The court determined it could not apply an interpretation to contractual language that didn’t specifically describe it — such as replacing Bellini’s common law notice entitlement with the legislative minimum notice.

As a result, since the contract didn’t clearly state the intention of the parties was to forego common law notice, Bellini still had an entitlement to reasonable notice under common law standards.

Having established the reasonable notice entitlement was still in effect, the court looked at the factors established in Bardal v. Globe & Mail Ltd. to determine the amount of notice entitlement. Bellini was employed with Ausenco and its predecessor, PROJEX Technologies, for more than three years.

His position didn’t have executive or managerial responsibilities but, as senior engineer, he offered guidance to junior engineers.

Bellini was over 60 years old when he was dismissed but had a history of short-term employment and a “highly-transferable skill set.” However, the court found he shouldn’t be expected to relocate at his age.

After considering the Bardal factors, the court determined Bellini was entitled to six months’ reasonable notice. Ausenco was ordered to provide Bellini with compensation and benefits equal to six months’ work.

For more information see:

Bellini v. Ausenco Engineering Alberta Inc., 2016 CarswellNS 735 (N.S. S.C.).

Jeffrey R. Smith is the editor of Canadian Employment Law Today. For more information, visit www.employmentlawtoday.com.

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