The former vice-president of maintenance operations at Harbour Air Seaplanes has lost his appeal of a wrongful dismissal ruling in front of the British Columbia Court of Appeal.
G.E. was terminated without cause in March 2020 and claimed wrongful dismissal. The case hinged on whether the termination clause in his employment contract, which incorporated the notice and severance provisions of the Canada Labour Code, precluded a claim for common law damages.
G.E.’s employment was terminated due to a downturn in business caused by the COVID-19 pandemic. Harbour Air paid him $10,203.93, which covered two weeks of salary in lieu of notice and five days of severance pay, as stipulated by the Code. He contested this payment, arguing that he was entitled to reasonable notice at common law, beyond the statutory minimums.
The Court of Appeal, noting that while the summary trial judge erred in the approach to contractual interpretation, they ultimately reached the correct conclusion. “Applying the practical, common-sense approach to contractual interpretation, the termination clause in (G.E.’s) contract was neither ambiguous nor non-compliant with the Code and was therefore sufficient to rebut the presumption of reasonable notice,” the Court of Appeal said.
Background
G.E. commenced his employment with Harbour Air on May 1, 2017, with an annual salary of $170,000, plus benefits and eligibility for a substantial bonus under the company’s Executive Bonus share program. His employment contract included a termination clause that read:
“The Harbour Air group may terminate your employment at any time without cause so long as it provides appropriate notice and severance in accordance with the requirements of the Canada Labour Code.”
Upon his termination on March 30, 2020, Harbour Air issued a letter stating that due to the pandemic’s impact on business, G.E.’s position had been eliminated, and his employment was terminated immediately. The letter outlined the severance package based on the Canada Labour Code, providing two weeks’ salary and five days of severance pay.
Court’s analysis
The appeal focused on two primary issues: the clarity and enforceability of the termination clause, and whether the clause excluded benefits required by the Code.
G.E. argued that the termination clause was ambiguous and failed to clearly limit his entitlement to statutory minimums, thereby not displacing the common law right to reasonable notice. He further contended that the clause allowed Harbour Air to alter his employment terms by not continuing his benefits during the notice period, contrary to section 231 of the Code.
The Court of Appeal acknowledged flaws in the summary trial judge’s interpretation but held that the termination clause unambiguously incorporated the statutory notice requirements. “There is no ambiguity in the parties’ intentions to displace common law notice with the statutory requirements of the Code,” it concluded.
Furthermore, the appeal court found no basis for G.E.’s claim that the termination clause was non-compliant with the Code. While Egan asserted that his severance should include bonuses and benefits, the court interpreted the clause as obliging Harbour Air to comply with statutory requirements without explicitly excluding any benefits.
Enforceability and compliance
The Court of Appeal reviewed several precedents, including Machtinger v. HOJ Industries Ltd., which established that the presumption of reasonable notice can be rebutted if the employment contract clearly specifies an alternative notice period. The Court found that the termination clause in G.E.’s contract met this standard by referentially incorporating the notice provisions of the Code.
In addressing G.E.’s argument that the clause was non-compliant because it did not include bonuses and benefits, the court distinguished this case from others where termination clauses were found unenforceable for explicitly excluding statutory entitlements.
“Termination clauses may be unenforceable if they exclude benefits an employer is required to pay during the notice period under the applicable employment standards legislation,” it said. “This is what occurred in Wood, where the termination clause excluded the employer’s statutory obligation to contribute to the employee’s benefit plan during the notice period.”
It noted that the termination clause “effectively” guaranteed his statutory notice and severance as required by the Canada Labour Code.
“It is silent about Harbour Air’s obligations in respect of bonuses and other benefits. This silence cannot be construed as permitting Harbour Air to contract out of any statutory obligations,” the Court of Appeal said.
It said the issues in this case really centred on whether Harbour Air had discharged its obligations under the termination clause by paying amounts in lieu of notice and severance that did not include his bonus and other benefits.
“However, (G.E.) has not argued in the alternative that if the Termination Clause is enforceable, Harbour Air failed to comply with it. Nor did he raise this issue in his pleadings or at the summary trial,” the Court of Appeal said.
The termination clause in the contract did not attempt to limit Harbour Air’s obligations beyond what was required by the Code, it ruled.
Conclusion
The appeal was dismissed, and the enforceability of the termination clause in G.E.’s employment contract was upheld.
For more information, see Egan v. Harbour Air Seaplanes LLP, 2024 BCCA 222 (CanLII).
