Worker argued individual termination pay ceiling didn't meet statutory minimum for mass terminations
Glenmore Printing is a custom printing and packaging shop in Richmond, B.C. The worker was employed as a senior pressman in the printing department since 2014.
The worker’s employment agreement included a termination clause that permitted the company to terminate his employment: after the first three months with one week’s notice or wages; after one year of employment with two weeks’ notice or wages; or after three consecutive years with three weeks’ notice or wages plus one additional week for each additional year of employment — up to a maximum of eight weeks’ notice or wages.
On Dec. 16, 2020, facing the significant downturn in its business, Glenmore placed the worker on a layoff.
The worker and the company subsequently agreed that the layoff was a constructive dismissal. However, they disagreed on the worker’s entitlements and the worker filed a wrongful dismissal action.
The worker insisted that the termination clause in his employment agreement was unenforceable because it provided for less entitlement than the minimum requirements of the B.C. Employment Standards Act (ESA).
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Maximum entitlement
The termination clause allowed for a maximum of eight weeks’ wages upon termination of employment, which the worker argued was in contravention of the ESA. Although eight weeks was in accordance with the ESA’s minimum requirements for individual terminations, the worker pointed out that the ESA required additional notice for mass terminations of 50 or more employees at one-location within a two-month period.
The ESA required up to 16 weeks’ additional notice for mass terminations, depending on how many employees were being terminated. The worker argued that, while his termination didn’t trigger this requirement, if he was employed for more than eight years and was subject to a group termination, he would be entitled to as much as 24 weeks’ notice under the ESA – which his termination clause didn’t allow.
This potential contravention of the ESA should render the provision void and unenforceable, the worker said.
The court noted that it was well-established in common law that it is implied that a contract of employment can only be terminated with reasonable notice. This implied term of reasonable notice can be rebutted by express contractual language, as long as it clearly specifies another period of notice that complies with reasonable minimum requirements in employment standards legislation.
In addition, a notice provision in an employment contract that does not comply with minimum statutory requirements is null and void and common law reasonable notice would apply, said the court.
The court pointed out that the B.C. Court of Appeal in Shore v. Ladner Downs, 1998 CanLII 5755 established that a contractual term that could potentially violate the statutory minimum over time should also be considered void from the beginning, even if it initially complied.
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Purpose of notice requirement
However, the primary objective of statutory minimum notice is to replace the wages that common law notice requirements were intended to protect and provide an opportunity for the employee to find new employment, while the purpose of the ESA’s extra notice requirement in mass terminations was to be “in addition to the employer’s liability, if any, to the employee in respect of individual termination,” the court said.
Mass termination notice is not meant to compensate for loss earnings during the notice period, but instead provide extra opportunity “to engage all involved in a process to determine if there could be any salvage of employment at affected plants,” as had been stated by the B.C. Court of Appeal, the court added.
The court found that the common law will not imply a contractual term that is contrary to the ESA, so it was an implied term of the employment contract that Glenmore was bound by the ESA’s mass termination provisions – even if the contract was silent on mass termination entitlements.
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Intention to follow ESA
The court found that the termination provision mirrored the individual termination entitlement under the ESA, so it was reasonable to conclude that Glenmore intended to incorporate the ESA into the employment agreement regarding an individual termination. This intention would naturally extend to mass terminations, where Glenmore would be bound by the ESA entitlements for those, the court said.
“A court will not imply a contractual right to circumvent the minimum notice requirements of the ESA or to render terms of the contract in any other way that is contrary to the legislative requirements of the ESA,” said the court.
The court determined that the termination clause expressly limited the worker’s entitlement to the statutory minimum on an individual termination, but was silent on mass terminations, which did not purport to impose any limits in those circumstances. As a result, the termination clause did not contravene the ESA and was valid, said the court.
Glenmore had paid the worker six weeks’ pay in lieu of notice, which was in accordance with the termination clause, said the court in dismissing the worker’s action.
