Did termination provision limit notice?

Read the facts of this case and decide for yourself

This instalment of “You Make the Call” takes a look at a termination provision in an employment contract that was intended to limit the amount of notice a worker would receive if she was dismissed without cause.

Linda Dodich was hired as the manager of recreation services at the O’Keefe, a seniors residence in Vancouver, in December 2002. On Oct. 5, 2004, Dodich was dismissed without notice and without cause with payment of three weeks’ salary.

Dodich sued, claiming she was entitled to reasonable notice and payment of equivalent salary in lieu of that notice. The employer said there was a term in her employment contract that limited the reasonable notice period. The termination provision in the contract read:

“Should it be necessary, (the employer) may end the employment relationship by providing you with a minimum of two weeks’ notice, or pay in lieu of notice, or such that is required by the Employment Standards Act, whichever is greater. In any event, we guarantee that you will be provided with compensation upon the severance of the employment relationship, on a without cause basis, which shall not be less than two weeks per year of service. This payment will include any statutory obligations (the employer) may have under the Employment Standards Act.”

You make the call

Did the above termination clause limit the reasonable notice period? OR Is the employee entitled to additional notice?

If you said the employee is entitled to additional notice, you’re right. Justice Holmes of the British Columbia Supreme Court said the clause only guaranteed a minimum amount of notice and was silent about trumping reasonable notice, nor did it set a maximum amount.

“The termination clause therefore purports to provide minimum amounts that will accrue to (Dodich) and to guarantee payment will not be less than a specified amount,” said Justice Holmes. “The wording of the guarantee does not suggest a maximum or upper limit and the presumption of reasonable notice is not clearly displaced by another notice period.”

The employer argued the court should interpret the plain meaning of the termination clause.

“I accept (the employer’s) premise that the guiding principles for construction require that one consider the plain meaning of the termination clause and seek to avoid absurdity in interpretation of it,” said Justice Holmes. “(The employer) is driven to interpret the termination provision’s plain meaning to be that the minimum period of notice (two weeks per year of service) and the maximum are the same. I do not accept that to be a plain meaning and if intended (it) could easily have been specified.”

The court said the termination clause was ambiguous. The first provision for the greater of two weeks’ notice or the entitlement under the act standing alone sets a maximum or limit on compensation to be paid. But the entitlement under the act is statutory and does not require the contract of the parties, the court said.

“The guarantee portion of the termination clause, in contrast, does not set a maximum and therefore leaves open the interpretation that if, for example, reasonable notice were found to be less than a period of two weeks for each year of service the (worker) would have the protection of a minimum guarantee,” said Justice Holmes.

Taking into account Dodich was 47, was a low-level manager and had been unsuccessful in finding another position, the court settled on a reasonable notice period of three months. At the time of dismissal, she was earning a salary of $38,000 per year so it awarded her $6,576.93.

In his decision, Justice Holmes also pointed out that awards regarding notice periods for short-term employees has trended upwards.

For more information see:

Dodich v. Leisure Care Canada, 2006 CarswellBC 78 (B.C. S.C.)

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