Canadian Employment Law Today

November 3, 2021

Focuses on human resources law from a business perspective, featuring news and cases from the courts, in-depth articles on legal trends and insights from top employment lawyers across Canada.

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Canadian Employment Law Today Canadian Employment Law Today | | 3 Cases and Trends Cases and Trends Canadian HR Reporter, 2021 AN ALBERTA company's severance pay policy cannot limit the reasonable notice entitlement to three long-time employees who were termi- nated without cause because the policy wasn't incorporated into their employment agree- ment, the Alberta Court of Queen's Bench has ruled. Calgary Co-operative Association is a retail co-operative in the Calgary area that operates grocery stores, petroleum products, liquor stores, and home healthcare products. It is also involved with a company collectively owned by retail co-operatives across Western Canada called Federated Co-operatives Lim - ited, which supplies services to the co-oper- atives. Calgary Co-op hired Martin Schaufert, 57, in 1982. Over the years, he held many posi- tions and took on a senior managerial role in 2007. He eventually achieved the position of director of operations, special projects, in which he worked directly with senior execu- tives, developed business plans, and managed workforce efficiencies. Terry Anderson, 55, was hired by Feder- ated Co-operatives in 1986, moving over to Calgary Co-op in 1990. In 2010, he became the director of the latter's internal audit de- partment. The department operated indepen- dently of the accounting department and was responsible for protecting the company's as- sets and business undertakings. Don McConkey, 57, also initially joined Federated Co-operatives, in his case in 1988. He transferred to Calgary Co-op in 2000 and became managing director of the liquor divi - sion in 2009. He was responsible for the di- vision's day-to-day operations, profitability, growth, and overall leadership. Severance policy limited notice for dismissed employees Calgary Co-op had a severance policy that came into effect on Feb. 23, 2010, which stipu- lated uniform termination notice and sever- ance to various categories of employees. For management employees such as Schaufert, An- derson, and McConkey, the maximum notice period was set out at 78 weeks (18 months). The policy stated that the notice or pay in lieu of that it specified "replaces any common law rights that an employee may have to reason - able notice of termination or pay in lieu of rea- sonable notice" and it required employees to sign a release before receiving any additional notice or pay in lieu above the legislated mini- mum notice periods. The policy replaced an older "dehiring policy," which didn't limit any common law rights to reasonable notice. Schaufert, Ander- son, and McConkey all had employment con- tracts as they moved through their various po- sitions with Calgary Co-op, but none of them specifically mentioned the company's corpo- rate policies. They were all aware of the sev- erance policy after it came into effect as they were involved in the termination of subordi- nate employees. Anderson in particular indi- cated that he understood the policy applied to all employees, but none of them signed any agreement incorporating it into their employ- ment contracts. On Oct. 17, 2017, Calgary Co-op ter- minated the employment of all three men without cause. Schaufert had more than 35 years of service, Anderson 31 years, and Mc- Conkey 29 years at the time of their termi- nation. The company made severance offers to each of them, but they all refused so the company provided them with 18 months' pay in lieu of notice, the maximum for management employees under the sever - ance policy. Shaufert, Anderson, and McConkey all sued for wrongful dismissal, claiming that they were entitled to more than 18 months' notice under the common law, based on their lengthy service with Calgary Co-op. Policy not incorporated into employment agreements The court noted that in order for an employer to rely on a severance provision, it must prove that the provision "represented the agreement of the parties" by being part of the employ - ment agreement. In this case, all three employ- ees worked for Calgary Co-op for many years before the severance policy was developed, and the policy "purported to make very sub- stantial changes to their employment contracts including their right to have their reasonable notice determined under the applicable com- mon law principles." However, none of the employment contracts or offer letters they signed incorporated any of the company's cor- porate policies "that existed or may exist in the future, or to authorize the [company] to unilat- erally amend the terms of their employment by issuing new or revised policies," the court said. The court found that the fact that none of the employment letters referred to the sever- ance policy and its "drastic limitations of their employees' common law rights" created significant ambiguity in Calgary Co-op's con- tractual intentions. It also found that just be- cause the three employees knew of the policy, didn't object to the policy, and applied it to their subordinates, it didn't mean that they agreed to it. "If the [company] wanted these policies incorporated in employment contracts, it had to engage the issue with its employees and obtain their unambiguous assent," said the court. "It could do that, for example, by asking them to sign employment letters, or amendments to their employment letters, incorporating the policy. The [company] did not do so." The court determined that the severance policy did not apply to any of Shaufert, An - derson, or McConkey. Based on the fact that they were all senior management employees with significant responsibilities, were in their fifties, and would need a significant period of time to find suitable alternative employ - ment, the court found that they were all en- titled to reasonable notice at the high end of the range — which the court found should be 24 months for all three of them. Calgary Co-op was ordered to pay each of the three dismissed employees pay in lieu of notice equivalent to 24 months' pay, minus what had already been paid to them. For more information, see: • Schaufert v. Calgary Co-Operative Association Limited, 2021 ABQB 579 (Alta. Q.B.). BY JEFFREY R. SMITH Fired Alberta employees not bound by severance policy Long-time workers pre-dated policy limiting notice entitlement; employment contracts didn't mention or incorporate policy The employees were aware of the severance policy but none signed an agreement adding it to their contracts. CREDIT:LISA MARIE iSTOCK

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