Wording made intention to remove common law entitlement clear: Nova Scotia court
An employment agreement that limited a short-term worker’s severance pay to one week as allowed under legislation was legal and binding, the Nova Scotia Small Claims Court has ruled.
The worker was a registered nurse with 25 years of experience. From 2018 to 2021, she worked for a private health company that guaranteed her 24 hours per week with benefits. During this time, she also performed occasional work teaching for the Nova Scotia Health Association.
In 2021, the worker applied to a job ad placed by Omega Specialty Nurses, a not-for-profit organization that provides specialized patient care operated by SRXC-NS Inc., for a manager infusion clinic. Omega offered her the position and said that it had plans to set up more clinics and expand to other parts of Atlantic Canada, which would result in her initial 20 hours per week eventually becoming full-time hours. The worker accepted the offer on March 27 by signing an employment agreement.
The employment agreement included a termination clause that stipulated that Omega could terminate her employment “at any time without cause by providing you with the minimum statutory requirements as prescribed in the applicable employment and/or labour standards legislation.” It also said that she would have no further entitlement to common law reasonable notice or pay in lieu.
A worker was entitled to statutory termination pay, even with just cause for dismissal, the Ontario Court of Appeal ruled.
Statutory minimum
In October 2021, Omega dismissed her without cause and paid her one week’s severance, which was the minimum entitlement for a short-service employee under the Nova Scotia Labour Standards Code. The worker filed a claim with the Nova Scotia Small Claims Court for additional compensation for wrongful dismissal, although she found comparable employment just over two months later with pay that was slightly less than her Omega compensation.
The worker also argued that Omega induced her to leave her previous employment by promising that it was expanding and leading her to believe that she was joining a growing business with increasing opportunities.
The court noted that in a without-cause dismissal, the employer does not have to justify its decision to dismiss the employee as long as reasonable notice, or pay in lieu of notice, is provided. The amount of notice that is reasonable depends on the factors established in the Ontario case of Bardal v. The Globe & Mail Ltd., 1960 CanLII 294, and the terms of any written employment contract that specifies the notice period, said the court.
The court found that the worker’s position required significant skill and training and the worker’s age could be a negative factor when changing jobs.
Clarity is key when it comes to drafting and enforcing termination clauses in employment contracts, say employment lawyers.
Clear and unequivocal language
As for termination clauses in employment agreements, the court noted that it was well-established that the language of a clause that displaces the presumption of reasonable notice and limits notice to less must be "clear and unequivocal” with “a high level of clarity.” Such clauses must also not violate the minimum statutory requirements relating to notice, the court added.
The court found that Omega left no doubt that its intention was to remove the common law presumption of reasonable notice through the wording in the termination clause that stated “shall not be entitled to reasonable notice or pay in lieu at common law.” The clause also clearly provided for the minimum statutory requirements prescribed in employment standards legislation, said the court.
The court also found that the employee was free to choose not to sign the agreement with such a limiting termination clause, but she chose to do so. As a result, her pay in lieu of notice was limited to the one week that Omega provided, the court said.
An employment lawyer discussed recruiting precautions to avoid inducement claims.
No inducement
As for the worker’s inducement claim, the court found that Omega did not specifically head-hunt or target her – it was she who read the job posting and applied for the job. In addition she acknowledged that one of the reasons she did so was because her prospects for advancement were limited with her previous employer.
The court found that it was expected that a company looking to hire someone will convey a positive message during the job interview and share plans, as long as there are no deliberately false representations made in bad faith. If plans don’t work out, the employer doesn’t bear any extra responsibility if the employment ends, even due to mismanagement, said the court in finding that there was no inducement and the worker’s move was “a calculated career move.”
The court acknowledged that under the common law, the worker would be entitled to reasonable notice of more than just one week – given her age and character of employment, two months would be an appropriate amount. However, the termination clause in her employment agreement was sound and limited her entitlement to the statutory minimum of one week, said the court in dismissing the claim.
