In Hall v. Quicksilver Resources Canada Inc., the British Columbia Court of Appeal held that despite the agreement with the former employer not referring to severance, the substance of the agreement and the surrounding circumstances all suggested that the $125,345 payment provided to the Plaintiff employee (the “Payment”) was a form of severance payment.
Background
The Plaintiff was employed by Employer A for 24 years. The site was eventually sold to the Defendant (Employer B) for a different use. In 2012, Employer A advised the Plaintiff his job at the site would be ending and offered to consider him for other positions with Employer A, or to pay him “severance” after closing the sale of the site. The Plaintiff opted for the “severance payment” and received $125,345. The Payment was initially referred to as “severance” various times but that language was deleted from the written agreement at the Plaintiff’s request. The Plaintiff also agreed to sign a release of liability in favour of Employer A. He was sent a Release along with the agreement, which he did not sign. After the Plaintiff signed the agreement, but not the release, Employer A sent him a second differently worded Release, which he signed. Employer A terminated his employment on closing of the sale. The Plaintiff began working for the Defendant (Employer B) in May 2013, and did so for seven months, until he was dismissed without cause.
The Summary Trial Judge found that the Payment was a “retention bonus” not severance and Employer B was liable for wrongful dismissal damages based on Plaintiff’s 25 years of service. He awarded 18 month’s pay in lieu of notice, and alternatively would have awarded seven month’s if employment was not found to be “continuous”. The Defendant (Employer B) appealed this decision.
Decision
The Appeal was allowed. The Court of Appeal found that the business was not sold as a going concern, and despite the fact that the agreement with Employer A did not refer to severance, the substance of the agreement, and the surrounding circumstances, the “factual matrix”, suggested that the Payment was a form of severance. The Court found that at most the Plaintiff was entitled to three months’ notice, based on his period of employment with the Defendant (Employer B).
Lessons for Employers
For maximum protection have an employment lawyer draft all agreements and contracts to be provided to your employees. If an employee is being terminated, make sure there is sufficient and appropriate wording in the agreement to leave no doubt. Have the employee sign agreements with Releases at the same time so there is no issue whether there is appropriate consideration, which makes the document legally binding. Make sure the Release is properly drafted the first time, and do not provide a second version of it to be signed by the employee at some later date.
Lessons for Employees
If possible, have an employment lawyer review all agreements provided by employers and do not sign them without having first obtaining legal advice. Not having the agreement reviewed by a lawyer may have cost this Plaintiff 15 months’ worth of notice.
Minken Employment Lawyers is your source for expert advice and advocacy on today’s employment law issues. Whether you are an employer or an employee, we can help. Contact us to see how.
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