Dependent contractor entitled to more notice than contract allowed, court says

Fuel agent’s series of short contracts added up to a service of 12 years

A fuel agent who was employed for several years is entitled to a reasonable notice period despite a contract stipulating otherwise, the British Columbia Court of Queen’s Bench has ruled.

Alan Pennock started working for the United Farmers of Alberta (UFA) in 1989 as a bulk fuel agent in Rumsey, Alta., on a one-year contract. In 1991 he became the UFA’s bulk fuel agent in Drumheller, Alta., and signed a three-year contract. When that contract ran out, Pennock continued to work in the same position without a contract until another three-year deal was signed in 1998 which expired in November 2001. All of Pennock’s contracts were standard for UFA’s bulk fuel agents and had a clause allowing either party to terminate the contract with 30 days’ notice.

Under the bulk fuel agent contract, UFA owned all the inventory, property and equipment of the agency. The agent was required to wear a UFA uniform, display UFA logos and sell only UFA products. The agent was required to staff the office, arrange bookkeeping equipment and hire drivers for the trucks.

On June 20, 2001, UFA’s area manager met with Pennock at his Drumheller office and told him his services would no longer be required. No exact date was decided upon, though the manager suggested Labour Day. The next day Pennock sent a fax to the manager acknowledging he had been verbally fired and he would leave UFA on June 29, 2001. The manager accepted the fax as a resignation.

Pennock claimed wrongful dismissal, saying he had been employed for an indefinite term and was entitled to reasonable notice. He also said the fax was not a resignation and was intended to confirm the notice of termination given to him the day before.

The court found the 12 years Pennock had worked for UFA under the terms of its contracts made him a “dependent contractor” and therefore the 30-day notice period allowed in the contract was unreasonable.

“While 30 days notice may be reasonable for a one- or two-year contract with a dependent contractor, it is not reasonable for the three-year contract which occurred after a nine year employment history,” the court said.

The court noted a reasonable termination clause, such has one which took into account “working history” and the employment relationship of a long-term dependent contractor, would have been upheld. However, each individual contract’s clause only took into account the short term of that particular contract.

“The relationship of (Pennock and UFA) altered the fundamental terms of the contract providing for 30 days notice,” the court said.

Considering the control UFA had over Pennock’s working conditions and the length of his service, the court found Pennock was entitled to nine months’ notice for his 12 years of service to UFA.

For more information see:

Pennock v. United Farmers of Alberta Co-operative Ltd., 2006 Carswell Alta 1356 (Alta. Q.B.).

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