Court confirms that uncertainty in contacts to be interpreted in favour of employees
The Alberta Court of King's Bench has dismissed an employer’s appeal in a wrongful dismissal case that found a termination clause wasn’t enforceable and awarded 10 months’ reasonable notice to a fired worker.
The now-36-year-old worker was hired in 2012 by Associated Engineering Alberta (AEA), a construction engineering company based in Edmonton, as a civil engineering CAD technologist. It was his first job since completing a college program for the position. His job duties involved preparing drawings and designs for municipal infrastructure projects.
The worker’s employment agreement included a termination clause that allowed AEA to terminate his employment without cause “upon providing the employee with notice as may be mandated by the Employment Standards legislation or such additional notice as the company, in its sole discretion, may provide or, at our option, pay in lieu of such notice.”
On Feb. 26, 2022, AEA approved the worker to work a reduced-hours schedule. He was still on this schedule when the company terminated his employment without cause two months later, on April 28. AEA provided him with the minimum pay in lieu of notice under the Alberta Employment Standards Code (ESC), equal to six weeks’ pay.
The worker sued AEA for wrongful dismissal, claiming that he was entitled to common law reasonable notice under the implied terms of his employment agreement.
Ambiguous termination clause
The trial judge found that the termination clause in the worker’s employment agreement didn’t extinguish the worker’s right to reasonable notice, as it lacked the clarity required to rebut the common law presumption of reasonable notice. As a result, the trial judge found that the worker was entitled to 10 months’ reasonable notice, with no deduction for a failure to mitigate despite the fact that the worker delayed his job search for six months and applied to only seven primarily part-time positions.
AEA appealed the decision, arguing that the trial judge erred in interpreting the terms of the employment agreement to preserve the worker’s common law right to reasonable notice. The company also contested the length of reasonable notice as excessive and argued that the trial judge erred in not reducing the damages for a failure to mitigate.
The court noted that the interpretation of the employment agreement was a question of mixed fact and law, so the trial judge’s decision should only be overturned if there was a “palpable and overriding error.”
The court also noted that the power imbalance and inequality of bargaining power in the employment relationship means that courts protect employees by interpreting uncertainty in employment contracts in favour of the employees. As a result, a termination clause that could be interpreted in multiple ways should be interpreted in the manner that would give “the greater benefit to the employee,” the court said.
Reasonable notice implied in contracts
In addition, employment agreements “are presumed to contain an implied term requiring an employer to provide reasonable common law notice of dismissal,” so any language rebutting that presumption must be “clear and unambiguous,” said the court, pointing out that established jurisprudence followed this principle. The court also said that employment standards statutes set minimum notice periods as required by law but they didn’t include any maximums, so contracts that simply refer to the legislation don’t exclude notice longer than the minimums.
The court determined that the trial judge correctly applied the test for enforceability in that “the employer’s legal obligation to give reasonable notice of termination can be displaced only by an express contrary agreement.” Since the termination clause didn’t expressly provide an alternative to common law reasonable notice in a clear and unambiguous way – it referred to the company’s “sole discretion” to provide additional notice - it didn’t extinguish the worker’s right to common law reasonable notice, said the court, referring again to the principle that “uncertainty ought to be resolved in favour of the employee.”
As for the reasonable notice period, the court upheld the trial judge's award of 10 months, considering factors such as the worker’s nearly 10-year tenure, his restricted job duties, and limited experience with other employers. The court noted that the award fell within a reasonable range based on comparable cases.
AEA argued that the worker failed to mitigate his damages, but the court found insufficient evidence that comparable employment was available or that the worker would likely have secured a role had he made greater efforts. The burden of proving a failure to mitigate lies with the employer and the lack of effort by the worker was insufficient without evidence of available suitable jobs from AEA, the court said.
The court upheld the trial decision, maintaining the 10-month reasonable notice award and rejecting AEA’s argument for reduced damages due to mitigation failures. In dismissing the company’s appeal, the court reiterated the importance of clear and unambiguous language in employment agreements to limit employees’ common law rights. See Plotnikoff v. Associated Engineering Alberta Ltd., 2024 ABKB 706.
