Wording of employment contract was ambiguous

Two employees whom the employer believed had been hired for a fixed term entitled to notice

Debra Duxbury and Michelle Tucker were hired on a part-time basis on Jan. 31, 2000, to take over the teaching of an esthetician program offered by Training Inc., a privately owned company that offers various programs of instruction intended to lead to certifications in various trades. When they took over the esthetician program, it was in a state of disarray. By the time the program ended in May 2000 the program was a success, thanks to their hard work.

Ms. Duxbury and Ms. Tucker received only positive feedback for the course. Although their employment was only until the end of May 2000, they assumed that they would be hired back again for the next term. In fact they had initial salary discussions with Training Inc. in May 2000 regarding the next term. Training Inc. was proposing to reduce their hourly rate from $25 to $20. The next term was scheduled to commence in July 2000.

Although no contract was in place, both Ms. Duxbury and Ms. Tucker spent a significant amount of time preparing for the next session on the expectation that they would continue working as instructors on a part-time basis or eventually a full-time basis.

Their work included preparation of a syllabus, arranging and setting up equipment, preparing teaching kits, re-working exams and even the recruitment of students for the next session by participating in a “meet the students” session. Training Inc. was aware of the work Ms. Duxbury and Ms. Tucker were undertaking and had even requested some of it be done.

The July session did not proceed, but Ms. Duxbury and Ms. Tucker were asked if they preferred the August session to begin on either the first or the eighth of the month. They continued their preparations in anticipation of an August session. However on July 14, 2000, Training Inc. told them that it was going to seek other instructors.

Ms. Duxbury and Ms. Tucker each brought a claim against Training Inc., claiming wrongful termination from their ongoing employment. As both claims arose from the same circumstances the claims were consolidated at trial. Ms. Duxbury and Ms. Tucker alleged that they were employed on a permanent part-time basis. In the alternative they sought damages on a restitutionary basis for the work and effort they did with respect to their anticipated continued employment.

Training Inc. took the position that Ms. Duxbury and Ms. Tucker were not fired from their positions because in its view, they were not employees in any event as their contracts had expired on May 31, 2000.

In considering the claims of Ms. Duxbury and Ms. Tucker the Court considered the nature of their employment contracts. Previous case law has stated that if after the specified term of the contract the parties continue their employment relationship then despite the specified term the contract may be thereafter seen as one of indefinite duration, which is subject to termination by either side upon reasonable notice.

The issue for the Court to determine was whether the employment contracts were for a fixed or an indefinite term. If there is doubt as to whether a contract is for a fixed term then any equivocation or ambiguity will be interpreted strictly against the employer’s interest. Employment contracts that are not absolutely clear as to being definite term contracts are strictly construed against the maker of the contract.

In this case the Court found that the contracts at issue were not free of doubt as to what the parties intended. The contract did not contemplate reapplying for a job after the initial term. It set out specific “renewal terms” leaving the contract open to two interpretations. Either it was automatically renewed and therefore a contract of an on-going and continuous nature unless one of those renewal terms were met, or alternatively, that the contract ends but will be renewed if the terms specified are met.

Given the fact that the contracts were not unequivocal or explicitly clear as to being a fixed term contract, the Court held that it must be seen as one of an indefinite term for which Ms. Duxbury and Ms. Tucker would be entitled to reasonable notice upon termination.

In assessing damages, the Court considered the fact that both Ms. Duxbury and Ms. Tucker spent about 100 hours preparing for the next instructional session. The Court awarded each of them compensation in lieu of notice equal to one month’s salary based upon their respective average month’s earnings.

For more information:

Duxbury v. Training Inc., 2002 ABPC 24.

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