The Math Confirms It: Contract Clarity Is Good

Written by Daniel Standing LL.B., Editor, First Reference Inc.

John Locke once lamented the limited ability of language to express an idea when he said, “So difficult it is to show the various meanings and imperfections of words when we have nothing else but words to do it with.” He could very well have been talking about an employment contract dispute. An employee may try to introduce ambiguity into a provision that the employer considered watertight at the time of drafting. In this article, Bryant v Parkland School Division, 2021 ABQB 391, a case in which the plaintiffs sought more money on termination than what their contracts provided, is discussed. The plaintiffs argued that the termination clause was vague and that they should instead receive the equivalent of common law reasonable notice. The Court of Queen’s Bench of Alberta ruled that the employment contract was sufficiently clear, highlighting the law concerning the clarity of contract wording. The case is a good example of how an employer can protect itself against creative yet unintended interpretations of its contract provisions.

Background

Thomas Bryant, Natalie Dzioba and Silke Larison worked in information technology for the Parkland School Division in Edmonton. When Parkland restructured its operations in 2014, the three plaintiffs were terminated without cause. Two of them had 15 years’ seniority, and the third had 10 years. At the time of their dismissals, the plaintiffs were given 60 days’ working notice.

The 60 days’ notice came from the standard form employment contract which stated the following at Clause 2: “This contract may be terminated by the Employee by giving the Board thirty (30) days or more prior written notice, and by the Board upon giving the Employee sixty (60) days or more written notice.”

The plaintiffs argued that 60 days was the “floor” for notice, not the “ceiling,” and that a ceiling clause had to be clear. With no idea what circumstances would lead to the “or more” part being applied, they argued the ambiguity should be resolved in their favour through an application of the “contra proferentem” rule which penalizes the party with the stronger bargaining position.

Parkland argued that “60 days or more” was clear, allowing Parkland discretion to give more notice if it saw fit. The contract also contained an “entire agreement” clause which, it said, eliminated the need to apply contra proferentem or look at any outside evidence. It also argued that Clause 2 rebutted the common law entitlement to reasonable notice, and the 60-day notice period was greater than what the Alberta Employment Standards Code would have provided the plaintiffs.

The court’s analysis

Justice Thomas Rothwell said there were two main issues: First, was Parkland allowed to dismiss the plaintiffs after giving them 60 days’ written notice? Second, if they had to give more notice, how much more? For reasons we will explore, the court did not have to address the “reasonable notice” question.

Justice Rothwell jumped into a contractual interpretation exercise to test the soundness of the plaintiffs’ argument that Clause 2’s ambiguity created a “floor” of 60 days’ notice. He explained the impact of Clause 2’s disjunctive “or” and made a math equation to illustrate his logic in concluding that 60 days was the floor.

Furthermore, he ruled, the “or more” part was not ambiguous just because the person being fired did not know how much more than 60 days’ notice they might get. He said it meant “60 days or something greater.”

At this point, the ruling takes a noticeable turn for the worse for the plaintiffs. Justice Rothwell noted that Clause 2 benefitted the plaintiffs since it gave them a shorter notice period for expressing their wish to terminate the contract. He also concluded that the “ordinary and natural meaning” of “or more” was not “reasonable notice.” The plaintiffs suffered another critical blow with the finding that Clause 2 “displaced” the reasonable notice period. Reasonable notice at common law would apply if the contract was silent on the point, or if it was unclear. The court considered several cases where the employer unsuccessfully tried to extinguish the employee’s common law right to “reasonable notice” in favour of a fixed notice period. The employers in those cases failed to do so because the termination clauses of their contracts were ambiguous.

Justice Rothwell made it clear that the contract does not have to contain any magic words or “release or waiver” type language to displace common law notice. Instead, whatever wording is used to contract out of the common law must be “clear and express.” The employer met that burden in this case, ousting the plaintiffs’ common law right to reasonable notice. Therefore, the notice period set out in the contract is governed. Given that finding, there was no need to consider what periods of reasonable notice would have applied at common law to each of the plaintiffs.

What this means for employers

Contract clarity is essential. The long and growing list of cases that consider ambiguous or illegal termination clauses indicates the prevalence of poor drafting. Employers can protect themselves from long and costly litigation following the breakdown of employment relationships by ensuring that their contracts are sufficiently clear and allow only one reasonable interpretation: the one they favour. As this case illustrates, courts do not require certain magic words to displace common law reasonable notice. If the intention is obvious and an employee does not stand to receive less notice than he or she would under employment standards legislation, there is not likely to be a problem. But the apparent simplicity of the task is misleading. As each employer’s operation is different, there is no one-size-fits-all solution. Employers would do well to seek professional help in drafting solid contract provisions that fit their business needs.

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