EMPLOYEE HANDBOOKS SHOULD NOT BE RELIED UPON TO AVOID COMMON LAW REASONABLE NOTICE ON TERMINATION

A recent BC Small Claims Court decision [Shehata v Ashton College Ltd., 2020 BCPC 37] reminds employers that it is best practice to clearly address termination entitlements in employment agreements or offer letters rather than attempting to rely on provisions in an employee handbook. 

Facts

The claimant, Mr. Shehata, was hired by the defendant, Ashton College, as a Senior Education Administrator (“SEA”) in November 2018. When the director was explaining the role of SEA, prior to the claimant’s hiring, the claimant asked what would happen if he was terminated following his probationary period.  He was told “we would follow Employment Standards”. Upon being offered the role of SEA, the claimant emailed to ask what the notice period was for termination or resignation. He was told that there was no fixed notice.  He was informed that for termination the employer would “have to calculate how many weeks of notice an employee entitled [sic] to keeping in mind the BC Employment Standards Act”.  The offer letter made no reference to the notice period but stated that his employment was subject to existing conditions of employment set out more fully in the employee handbook.  The claimant was not provided with a copy of the handbook until after he had accepted the offer of employment. The employee handbook attempted to limit the claimant’s entitlement (on termination without cause) to the minimum entitlement in the Employment Standards Act, RSBC 1996, c 113.

The claimant was terminated without cause in April 2019 after 4.5 months of service.  He was 38 years old.  The employer provided one week of pay in lieu of notice on termination.  The claimant commenced a wrongful dismissal action seeking payment in lieu of reasonable notice.   

Legal Test and Analysis

The Court held that, to be enforceable, any waiver of the implied common law reasonable notice/pay in lieu must be clearly discussed and agreed to.  The Court held that none of the communications between the claimant and his employer referred to him waiving his common law entitlement.  The Court also held that, because the employment contract was already in place when the claimant received the employee handbook, it did not form part of the employment contract.  

The claimant was awarded payment in lieu of reasonable notice, which was assessed as two months of pay in this case.   

Implications for Employers

It remains best practice for employers to address or limit the employee’s entitlement on termination in the written employment agreement provided and signed before the employee commences their employment.   Failure to do so can be expensive for employers as they will likely be required to provide payment in lieu of reasonable notice on termination without cause.  In this case, for example, the employer was required to provide 2 months of pay to an employee who had only been employed for 4.5 months. 

This update was authored by Deanna Froese. Questions? Comments? Concerns? Contact Deanna at [email protected] or anyone else listed on the authors page.