Legal News

Statutory Minimum Notice Period Imposed on Senior Executive
November 24, 2009

A recent BC Supreme Court decision demonstrates the courts’ willingness, when the evidence warrants it, to uphold termination provisions in employment contracts that limit long-term senior employees to the minimum notice provisions in the Employment Standards Act.

The plaintiff was a 12-year employee who started his employment as Controller and was later promoted to Chief Financial Officer and Vice-President Finance. The employment contract that he signed when he first joined the employer limited his entitlement to notice of termination to the ESA statutory minimum. When he was terminated, he argued that he should be entitled to common law notice, which might have amounted to as much as 18 months, because the termination provision was ambiguous, it only contemplated employment in his initial position with the company, and it was no longer enforceable because of changes to the employment relationship.

The Court rejected his claim, and found him entitled to only eight weeks’ notice under the ESA. The Court found that he was a sophisticated individual who understood the termination provisions, obtained legal advice before signing the contract, and negotiated and redrafted some of its terms rather than accepting it on a take-it-or-leave-it basis. The contract expressly reserved the employer’s right to require the employee to assume new and varied duties and required that any changes to the agreement be made in writing. When he signed it, the employee expected his employment to be long-term, with opportunities to advance within the company. Further, the Court found that the changes in position were typical of the normal and incremental evolution of a professional’s job, rather than constituting fundamental changes from what he was initially hired to do. The Court considered these factors inconsistent with an intention that the agreement would cease to be effective.

Wernicke v. Altrom Canada Corp