Many employers rely on oral agreements or brief offers of employment. Recent cases from the B.C. Supreme Court highlight the importance of properly phrased employment contacts. The costs are typically minimal and the benefits can be substantial.
In Macaraeg v. E Care Contact Centers Ltd. a customer service representative, terminated after less than 2 years employment, commenced an action for wrongful dismissal and for unpaid overtime. Her signed written “offer of employment” was silent on the issue of overtime. She claimed she had worked 12 hours days. She also made acclaim on behalf of other employees for overtime under the B.C. Class Proceedings Act. The Employer, E Care, brought an application, seeking the court’s decision on two legal points: (1) whether the overtime entitlements under the Employment Standards Act were implied terms of the employment contract; and (2) whether Ms. Macaraeg was entitled to bring her claim for statutory overtime entitlements in the court or if she had to pursue those claims through the mechanism provided for under the Employment Standards Act.
Following a detailed analysis of some 30 years of case law, Madam Justice Wedge rejected the “traditional” answer to these two questions. First, she concluded that terms of an employment contract failing to meet the minimum statutory requirements will be replaced with either the common law or statutory requirement, whichever is more generous to the employee. Where no rights exist at common law, the void provisions will be replaced by the statutory requirements. In particular, the court relied on the 2003 decision of the Supreme Court of Canada in Parry Sound (District) Social Services Administration Board v. OPSEU which concluded that Ontario human rights legislation was incorporated into the employment contract, in that case a collective agreement. In the result, the court concluded that “employment rights of employee conferred by statute are implied into employment agreements irrespective of the parties’ subjective intentions.” The statutory entitlement to overtime was implied into the employee’s employment contract.
Second, on the entitlement to bring an action in court, the court analyzed the case law and the provisions of the Employment Standards Act in considerable detail. Traditionally, an employee would have had to pursue claims for statutory benefits, such as overtime (unless provided for in the employment contract) through the Employment Standards Branch as decided in the 1988 case of Sitka Forest Products Ltd. v. Andrews. The express and stated purposes of the Act are to ensure that employees receive minimum standards of compensation and to provide for efficient means of resolving disputes. The court noted that provisions of the Act contemplated that employees could pursue claims though alternate means and, as well, that the legislature did not give the Employment Standards Branch exclusive jurisdiction. Madam Justice Wedge noted that the Supreme Court of Canada since the decision in the Sitka Forest Products case has issued several decision confirming that employment standards legislation must be interpreted in a manner that expands the protection and benefits provided to employees. The court concluded that the rights sought to be enforced were not pure statutory rights, but were implied terms of her employment agreement. The rights could be pursued though the courts.
The importance for employers of the decision in Macaraeg is clear. In University of B.C. v. Wong the court upheld the notice provision of the written employment contract. The employee was terminated during a twelve month probationary period. The contract provided:
“An employee terminated during the probationary period for reasons other than just cause shall receive or pay in lieu of notice in accordance with the provisions of the Employment Standards Act.”
An arbitrator had ruled that Mr. Wong was entitled to (much higher) common law reasonable notice and awarded him $100,000. The B.C. Court of Appeal held that on a plain reading of the contractual language, the notice provisions under the Employment Standards Act were incorporated into the contract and, therefore, Mr. Wong was entitled to only one week’s notice.
Consider another recent case from the B.C. Supreme Court, Strauss v. Albrico Services (1982) Ltd.. In that case, a 47 year old journeyman insulator, without a written employment contract, was terminated for theft after 16 years service. He used a company gas card to buy gas for purposes. While the court recognized that theft is a serious matter, it is necessary to analyze all the circumstances surrounding the alleged misconduct: (1) Does the evidence establish the employee’s deceitful conduct on a balance of probabilities; and (2) does the nature and degree of the dishonesty warrant dismissal? In this case, the court was not satisfied that the employer’s instructions were sufficiently clear and, therefore, the employer did not have just cause, The court then went on to determine reasonable notice. In Peterson v. Wilson Logistics (Canada) Inc., the court noted:
“One month of notice for each year of employment is a sound starting point but is no more than a guideline. Rather, notice should be determined … in the context of each case. “
Mr. Strauss was awarded 16n months notice. However, because he had successfully mitigated his loss through other employment, he ended up not having suffered a loss.
In Proctor v. Wal-Mart Canada Corp., the court concluded that continuing dishonesty on the part of a manager justified dismissal. In that case, a manager was dismissed for taking advantage of fictitious discounts and for attempting to conceal his original misconduct, lying and attempting to obstruct the employer’s investigation.