Alberta worker awarded 10 months’ notice at full pay, despite a company-wide pay cut during the notice period
An Alberta company must pay a managerial employee that it fired without cause compensation for eight months’ notice of dismissal with no deductions reflecting a pandemic pay cut during the notice period, the Alberta Court of Queen’s Bench has ruled.
Canadian Energy Services (CES) is a provider of drilling fluids and production and specialty chemicals for the oil and gas industry and is based in Calgary. Kendra Hunsley, 35, joined CES in 2012 as a drilling fluid programmer after six years as a chemist with other employers in the industry. She had a university degree in chemistry and was registered with the Association of the Chemical Profession of Alberta.
Hunsley’s job duties included preparing drilling fluid proposals, interpreting and preparing well reports, preparing tour sheets, data comprehension, constructing well synopses and area maps, preparing reviews, and planning. In August 2014, she was promoted to assistant manager, technical services, where she supervised other drilling fluids programmers while performing the same duties.
Hunsley was promoted again in January 2018 to the role of manager, well planning. However, she continued to perform drilling fluids programmer duties occasionally while managing about five drilling fluids programmers at a time.
About one year later, CES went through some internal restructuring and the company hired a new vice-president of business development who assumed responsibility for some functions that Hunsley had been performing, including the hiring and firing of employees and expense account approvals. The new position also put another layer of management above Hunsley, as she now reported to this individual instead of directly to CES’s president and chief operating officer.
Without-cause dismissal due to financial problems
By September 2019, the oil and gas industry and Alberta was experiencing financial challenges and CES suffered significant drops in its business. As a result of this downturn, the company terminated Hunsley’s employment on Sept. 24, 2019. CES didn’t allege any just cause, so Hunsley’s dismissal was without cause.
Hunsley filed an action for wrongful dismissal and claimed that she was entitled to a reasonable notice of 10 months, given her position, experience, and the difficulty of finding a comparable job during the economic downturn in the industry. CES disagreed, arguing that six to seven months was more appropriate for someone with Hunsley’s length of service.
The court found that Hunsley’s role with CES involved technically-qualified work and she eventually became the leader of her team when she became an assistant manager, while continuing to perform those technical functions while assuming a higher level of responsibility. After she became manager, she took on additional responsibility for hiring and firing as well as expense approvals and reported directly to the top executive of CES. This lasted for about one year before the new vice-president role was created. When she started reporting to this individual, her role essentially went back to her previous responsibilities in the assistant manager position, said the court.
The court also found that Hunsley’s age at the time of dismissal, 34, was a neutral factor and her seven years and seven months of service with CES was a moderate length of tenure.
Things were a little more complicated when it came to the character of Hunsley’s employment and the availability of similar employment due to the changing responsibilities of Hunsley’s role and the adverse economic conditions in the industry at the time of her dismissal. However, it was clear that Hunsley worked “in a skilled, technical capacity based on her undergraduate degree in chemistry, ending with a lower management position.” The court noted that although Hunsley’s job title didn’t change when the new vice-president started after the internal restructuring, her role was essentially reduced from a high-level management position back to a supervisory role. As for the economic conditions, the court added that it could increase the notice period, but it should be given undue weight.
Ultimately, the court determined that Hunsley was entitled to eight months’ reasonable notice and should receive damages reflecting the compensation she would have earned over this period, including all aspects of compensation that constituted a personal benefit to her, if she had been given working notice.
Pandemic-related pay cut during notice period
CES argued that Hunsley’s damages should be reduced because in April 2020 all employees accepted a salary reduction and the RRSP plan was discontinued due to business challenges from the COVID-19 pandemic. However, the court disagreed, finding that the changes would have resulted in an 18.5-per-cent reduction in Hunsley’s salary, which would amount to a fundamental breach of the employment contract constituting constructive dismissal. While employees hoping to continue their employment during the pandemic might have accepted such a change, it’s unlikely an employee on working notice of dismissal like Hunsley would have accepted it, the court said.
“It would be wrong in principle for me to assume such an employer could reduce its damages by unilateral post-dismissal changes in the compensation package,” said the court in finding that the damages should be based on Hunsley’s salary and RRSP contributions at the time of her dismissal, regardless of anything that happened afterwards.
CES also argued that a $500-per-month parking expense account shouldn’t be included in the damages, as she didn’t need to park in downtown Calgary during the notice period since she wasn’t coming to work. The court disagreed, as CES paid it to Hunsley regardless of how much she paid for parking. The court refused to have Hunsley account for the “advantage” of being unemployed, as that could open the door to other savings and potentially offsetting costs, the court said.
The court also agreed with Hunsley that she could claim compensation for “the reasonable expense of maintaining her professional standing” through dues she paid during the notice period required to maintain her registration with the Association of the Chemical Professional of Alberta. CES paid these dues while she was employed with the company and would have done so during the notice period.
“Professional memberships are of benefit to an employer, but also a personal benefit and interest to an employee in keeping her current with industry developments,” said the court.
In total, CES was ordered to pay Hunsley damages for lost compensation and benefits over the eight-month notice period covering her base salary, lost RRSP contributions equal to six per cent of her salary, medical and dental benefits, parking expense account, professional dues, and cellphone benefits.
For more information, see:
- Hunsley v. Canadian Energy Services LP, 2020 ABQB 724 (Alta. Q.B.).
