Can you be a casual employee after nearly 25 years of service?

When is a “casual” employee truly casual?

Back in 2023, when challenged by a wrongful dismissal claim, an Alberta employer claimed an individual who worked on and off for their company for nearly 25 years was a casual employee — and the applications judge agreed.

But this was recently overturned on appeal, as the Court of King’s Bench awarded the individual 18 months’ notice concluding that she was, in fact, a permanent employee.

This kind of situation is rare, which is why it makes for an interesting case, says Daniel Jonasson, employment lawyer at Bow River Law in Calgary.

“There's a relative absence of case law on this. So, this was a very useful case in that it laid out quite clearly a lot of the principles that a court will consider when making the determination.”

And it’s definitely a win for employees, he says.

“The court, in applying such a contextual interpretation, really leaves a lot of room open for employees who have unconventional working relationships to still be deemed permanent employees and thus to still be entitled to that higher presumption of severance.”

But it's important to remember that no factor is determinative, and courts will always look at the exact specifics of the case, says Jonasson.

“Which is why one piece of advice I'd give to HR professionals is, if they are considering the termination of an employee, look at it on a very factual level, a specific basis. Don't apply a formula or a rubric to it. Look at the particular facts of the case and consider what a court may find in those circumstances.”

One month’s salary after 25 years

The case, Falkenberg v Stephen Avenue Securities Inc, centred on Colleen Falkenberg, who worked for Stephen Avenue Securities (SAS) from 1996 until her termination in December 2020. Falkenberg, who held roles including registered representative, compliance officer, and corporate secretary, waived her entitlement to a salary in 2016 and 2017, and was working part-time (three days per week) and earning $5,000 per month at the time of her dismissal.

Upon termination, SAS paid her one month’s salary in lieu of notice. Falkenberg sued for wrongful dismissal, seeking damages based on her long tenure and managerial role. The applications judge initially found she was a “casual part-time employee,” limiting her notice period to six months and awarding her five months’ pay after accounting for the payment already made.

However, on appeal, Justice Robert Armstrong found the lower court’s reasoning flawed, emphasizing that the “term ‘casual employee’ has no precise definition at common law” and that such a determination must be based on a holistic review of the employment relationship, not just gaps in salary or documentation.

“While a salary that fluctuates may be one indicator of casual employment, it is not, in and of itself determinative,” he said.

Reasonable notice of 18 months

The court found that Falkenberg’s duties were integral to SAS’s operations, including regulatory compliance, management, and strategic planning. She was also the only SAS employee registered with the Investment Industry Regulatory Organization of Canada (IIROC), a role essential for the company’s business.

“She was not a casual employee. Her entitlement to reasonable notice of the termination of her employment should not have been predicated on her classification as a casual employee,” said Armstrong.

The court determined that Falkenberg’s employment was continuous from 1996 to 2020, spanning 24 years. Taking into account her age (59), length of service, and managerial responsibilities, the court set the reasonable notice period at 18 months — substantially higher than the original six months awarded.

The decision also clarified that part-time status does not reduce the notice period, only the damages calculation:

“Part time status is not a relevant factor when determining a reasonable notice period. The impact of part-time status will be reflected in the calculation of damages as the part-time wage will be the basis for calculating the value of the loss over the reasonable notice period.”

Falkenberg was awarded $90,000, less amounts already paid.

Lack of case law a challenge

In fairness to the application judge, there is a relative absence of case law on this issue, says Jonasson.

“As the court noted, the biggest factor there was that the employee had not brought forward a lot of evidence regarding her wages and, in two years, had completely waived her salary — one year she received no salary, and then another she received artwork in lieu of salary. So that is... obviously, a very unconventional working relationship.”

The original decision on this was “a little bit surprising,” says Shane King, partner at McLeod Law in Calgary.

“It's rare that a notice period is moved down simply because of the form of work,” he says, citing the Bardal factors, including length of service, the employee’s age and the availability of similar employment.

“I suppose with a ‘casual’ employee, the likelihood of them getting commensurate replacement employment should be easier, so they should be able to mitigate, so it shouldn’t arise as often,” says King.

“With Ms. Falkenberg, because of her tenure, she's been there a long time, and her age, it's a little bit unique in how long it would potentially take her to get a new job.”

Factors to consider with casual employment

The judge in the decision said that whether an employee is a casual employee or not is a fact-specific determination that must be made on a case-by-case basis. He provided a “non-exhaustive list” of the factors that should be considered when making the determination:

• Whether there is a written employment contract and the terms of any employment contract, whether in writing or not.
• The existence or absence of a regular work schedule.
• The existence or absence of a pattern of work overtime.
• The nature of the employee’s duties and responsibilities.
• How the employee is paid, including enrolment in any company benefit plans.
• Whether the employee can refuse work.
• The degree of integration of the employee into the workplace.
• The expectations of the parties involved in the employment relationship.
• Any relevant regulatory issues and tax treatment.

No one factor is determinative, but among the more important factors are the presence or absence of a regular work schedule, says Jonasson.

“Part-time employees tend to have a regular work schedule. They're expected to come in regularly, while with casual employees, their work tends to be sporadic.

“They are called in on an as-needed or on-call basis to assist with certain tasks or certain projects, or even in situations where, let's say, the employer is understaffed and just needs an extra person on hand.”

If it’s a situation where the employee works one week, then is absent for a few weeks or months, and then comes back for a few days’ work, that would likely be deemed a casual employee, says King.

“And it would be easier just to say, ‘You're not receiving any more shifts’ as opposed to actually terminating the individual… [In a] true ‘casual’ situation, there's no guarantee of shifts. So, you could just phase out carefully the employee in not giving them any shifts,” he says.

“If there is some sort of a guarantee of shifts or work, then you need to be a lot more careful that you're not deemed to be constructively dismissing them by not giving them any more shifts.”

Circumstances of job matter

Another big factor is the nature of their duties and responsibilities, says Jonasson.

“As the court noted in this case, if the employee is engaging in high-level decision-making, that's typically not indicative of a casual employee.”

But employers and employees should take note: just because you call it one thing doesn't necessarily mean it is that thing, says King.

“Whatever the employee and employer agree is what the situation is called is one of the factors and only one of the factors — the courts can decide what it actually is, based on all of the actual circumstances.”

For example, if someone is working 30 hours per week for a significant period of time, the courts are not going to consider them a casual employee — regardless of whatever the contract may say, he says.

“A contract in that regard would probably... be contrary to the provisions of the Employment Standards Code, and then those provisions wouldn't apply at all.”

Tips for HR: Put it in writing

One of the top tips from both lawyers is to have an employment contract with employees.

With a properly drafted contract at the outset, “you're going to save yourself so much trouble at the end,” says King.

“You can have a casual employee have an employment contract. And it could be as simple as: ‘You aren't guaranteed shifts. If you don't receive shifts for a period of time, it will not be deemed a constructive dismissal.’

“And you can still have termination provisions in a casual employee's contract. And if it's properly drafted, they will be upheld... It doesn't mean the employee may not try to fight it, but if you do it right, it will be upheld.”

And if there’s ever a transition from casual to part-time, or part-time to full-time, you’ll want to document that transition with a written employment contract, he says.

“If done properly, you can cap any potential severance or notice provisions in there. So, if you want, you can limit it to the employment standards code minimums, if you do it properly.”

If someone goes from casual to full-time for example, but it’s not properly documented, says King, “the employee's entire tenure as a casual employee may apply to the termination provisions once they become full-time. So, it is very important that you have it properly drafted at any transition.”

Jonasson agrees that HR should set clear expectations with a written contract — and then ensure that it's followed if, in fact, they wish for an employee to remain casual.

“The employer can then argue this document clearly set out... the expectations between the parties.”

However, the document must match the working relationship, he advises.

“If the agreement is quite clear that they're a casual employee, but if their actual working relationship points more towards a permanent employee, a court would likely find that they are, in fact, a permanent employee.”

Tips for HR: Calculating severance

While there's no strict formula, courts typically hold that a casual employee is entitled to less severance and a shorter notice period than a permanent employee, says Jonasson.

But employers should take an honest look at the employment relationship because circumstances can change over time, he says.

“Consider all the relevant factors and consider ‘Is it likely that a court will deem this to be a casual or a permanent employee?’... If there are several factors that point towards permanency of employment, take that into account when it comes to making a severance offer. That maximizes the chances that it will be accepted or, at the very least, if they choose to dispute it, that a settlement can be reached quickly.”

If you take the example of a 27-year employee, they could receive the maximum severance of 24 months, based on their earnings at the time of termination, says King.

But if the person received a lower income for the first 25 years, and then had a much higher income in the last two years, the severance is going to be based on that higher income.

“That may not be what the employer expected or thought coming in, but that's absolutely what it's going to be based on,” he says.

“So, it is very important that you know how you're ending the relationship when you come into it… if you don't have that properly documented from the outset, you could be in for a big surprise if the employee's income is higher at termination than it had been for the majority of their tenure.”

Employers should also remember they are allowed to provide notice of an upcoming termination — but not give severance, says King; for example, working notice of 12 months.

“A lot of times, employers don't do that because they think perhaps the employee might not be the best employee for the last period of time. But if you communicate with the employee, it is very possible that they were looking for a change or would be okay with ceasing their employment.”

He warns this must be done carefully, otherwise it could be deemed a constructive dismissal, so legal advice is recommended.