Canadian Employment Law Today

Canadian Employment Law Today | 7 Cases and Trends Canadian HR Reporter, 2019 all statutory obligations and would not "be less than the minimum statutory termina- tion pay and severance pay requirements." On Nov. 1, 2017, Johnson's manager in- formed him that his role was being eliminat- ed. If he couldn't find another role with IBM within 30 days, his employment would be ter- minated. Johnson was unsuccessful in finding anything else with the company, so on Dec. 5 IBM gave him notice of termination without cause due to a staff reduction initiative, effec- tive Feb. 6, 2018, with his benefits continuing until that date. e company also offered six months of career transition and counselling services, but Johnson opted out. IBM provided one week of working notice and paid him severance equal to 29 weeks' salary plus incentive pay — IBM's incentive plan stipulated that in case of termination of employment, the employee received incen- tive based on business results as of the last day of the last full month of employment, in this case Nov. 30, 2017. e total payout to Johnson was $101,288.30. Johnson filed a wrongful dismissal com- plaint, arguing the termination provision in his employment agreement was ambiguous and unenforceable because it didn't address all compensation payable under the B.C. Employment Standards Act. He pointed out that IBM actually paid more than what the termination clause required, which he ar- gued demonstrated the clause's ambiguity. e court noted that under the act, em- ployers are obligated to pay terminated em- ployees with three or more years of service three weeks' wages plus one additional week for each additional year of employment, up to a maximum of eight weeks' wages, or a com- bination of written notice and wages equal- ling that total. e act defines wages as sala- ries, commissions, and incentives related "to hours of work, production or efficiency." e court commented that IBM's employ- ment agreement was "not a masterpiece of drafting" but it was not ambiguous. e termination provision stated that the sever- ance allowance was not to be less than the minimum statutory termination pay and severance pay requirements, which estab- lished the statutory minimum as "a floor for severance." e amount provided for in the clause was greater than the minimums and sufficient to avoid a common law reasonable notice entitlement, said the court. "In this case, the statutory minimum is eight weeks' wages. Under the employment agreement, Mr. Johnson is entitled to 21 weeks," the court said. "IBM Canada under- stood that 21 weeks severance is what arises from the agreement but in this case used 29 weeks to calculate severance." e court also found that the ending of eligibility for the incentive plan was reason- able, as Johnson's entitlement was more than covered by the amounts allowed for in the termination clause. Given that the sever- ance paid to Johnson was greater than his entitlement using his average weekly wages anyway, the details of the calculation weren't necessary to delve into — and the overpay- ment couldn't be used as proof of ambiguity, said the court. e court found that had the termination clause been unenforceable, Johnson would have been entitled to 12 months' notice. However, the court dismissed Johnson's wrongful dismissal claim. For more information see: • Johnson v. IBM Canada Ltd., 2019 BCSC 592 (B.C. S.C.). Severance amount covered all compensation entitlement « from NO AMBIGUITY on page 1

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