Termination provision can incorporate employment standards minimums but change in job duties invalidated employment contract
A British Columbia worker’s duties changed enough when he received a professional engineering designation that his employment contract — and its termination clause — are no longer enforceable, the B.C. Provincial Court has ruled.
Jack Tsai, 30, was hired out of school in 2008 by Atlas Anchor Systems, a company that designs, engineers, supplies, and certifies exterior building maintenance solutions for construction sites and existing buildings, based in Vancouver. His new position was that of engineering assistant at Atlas’ head office.
Tsai’s duties as outlined in his employment contract included going to job sites, writing reports, testing products, attending meetings of the Canadian Standards Association (CSA), doing calculations, performing the function of a safety officer, making purchase orders, research and development, operating computers and machines, and helping with warehouse inventory control — including driving forklifts.
Tsai’s employment contract, which he signed before starting work and for which he had a period of time to consider it and seek legal advice, included a termination provision. The provision stipulated that once Tsai completed his probationary period, Atlas could terminate his employment at any time without cause by providing notice or pay in lieu of “as may be required by applicable employment standards legislation.” After such a termination, Atlas could have no further obligation. Tsai also agreed that he must provide at least four weeks’ notice of resignation.
Another provision in the contract allowed Atlas “the right to make reasonable job changes to your job responsibilities from time to time to accommodate its business needs.”
Tsai worked in this position until April 2013, when he received his professional engineer’s designation. Atlas management sent him a letter outlining new responsibilities to reflect this designation. The new duties included specialized project engineering, reviewing fabrication drawings and calculations with other engineers, and reporting to a new boss. He would still be responsible for research and development of products. Though he didn’t officially supervise any employees, he provided oversight and guidance for those working on or developing projects.
The change in duties was accompanied by a pay raise from $52,000 to $70,000 per year.
Tsai no longer visited job sites or prepared reports in favour of his new duties, and he was no longer involved in workplace safety. He also went to management meetings and started representing Atlas in developing standards with CSA.
In July 2015, Atlas terminated Tsai’s employment without cause. It provided him with seven weeks’ pay, which was the minimum amount stipulated in the B.C. Employment Standards Act and allowed for in the termination provision of Tsai’s contract.
Tsai sued for wrongful dismissal, arguing the termination clause was unenforceable because as a professional engineer he was exempt from the Employment Standards Act. He claimed that he was therefore entitled to common law notice. He also claimed that when he received his professional engineering designation, his job duties changed significantly to the point where his employment contract was no longer valid.
The court noted that it had been established in jurisprudence that employment standards legislation could be incorporated into employment contracts if it wouldn’t otherwise apply, as long as the contract wasn’t unconscionable. It referred to the B.C. Supreme Court’s 2014 decision in Brown v. Utopia Day Spas and Salons Ltd., where the higher court stated:
“Absent unconscionability, an employer can make contracts with employees that ‘referentially’ incorporate the minimum notice periods in the ESA. Such contractual notice provisions are enough to displace the presumption that the contract is terminable without cause only on reasonable notice.”
The court found that Tsai’s employment contract properly incorporated ESA provisions and the termination clause was enforceable, as long as the contract itself was.
As for the change in Tsai’s job duties, the court agreed with him that there was a substantial and fundamental change in the employment contract. While it wasn’t surprising that Tsai’s job duties changed with his professional engineering designation and there was an expectation this would happen when the employment contract was signed, the new designation wasn’t guaranteed due to the difficulty of the process and it wasn’t contemplated in the contract.
The court determined that Tsai’s employment and responsibilities fundamentally changed and eroded the foundation of his employment contract beyond what it contemplated. As a result, the contract could no longer apply and the termination clause — despite its sufficient wording — could not be enforced. Tsai was entitled to 10 months’ notice of termination, said the court.
