Silence Is Golden in Hypothetical Group Termination

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

Often, cases about the validity of termination provisions in employment contracts focus on whether the contract language sufficiently ousts the common law presumption of reasonable notice. Such provisions commonly refer to, or incorporate by reference, a minimum legislative standard amount of notice that must be given. What those generally familiar with the law might not think twice about is precisely which minimum standard applies. The one applicable to individuals, right? Now, what if the contract is silent about group terminations? Could an ex-employee argue the termination clause was invalid because it didn’t account for the possibility of a group termination? Something that, at the time the contract was made, was nothing more than a theoretically possible outcome? This was the conundrum the Supreme Court of British Columbia faced in 2023 BCSC 25.

Background

A print shop employee was laid off during the pandemic for a period so long the parties agreed the employee had been constructively dismissed. They also agreed that if the termination clause in the contract didn’t meet the minimum standards in the Employment Standards Act, the clause would be ruled void.

The point that divided the parties was which statutory minimum requirement applied: The one applicable to individual employees allowing for eight weeks’ notice, or the one applicable to group terminations which provided a notice top-up of 16 additional weeks?

What the court decided

The court’s answer focused on the differing purposes of the two statutory notice periods. The purpose of the common law notice period, it said, was to give a dismissed employee a reasonable chance to find suitable alternate employment. The purpose of the group termination notice period was different: according to the British Columbia Court of Appeal, one of the underlying purposes of that notice period was to “engage all involved in a process to determine if there could be any salvage of employment at affected plants.”

Of the two types of notice period contained in the Employment Standards Act, said the court, only the one applicable to individuals serves the same purpose as the common law entitlement. Therefore, to oust the common law entitlement to reasonable notice, the contract had to meet the statutory minimum requirements of the individual notice period, not the group termination notice period.

Furthermore, the court said the contract didn’t violate the Act merely by remaining silent on group terminations. Yes, the contract capped notice at eight weeks, but courts won’t imply a contractual right to circumvent the minimum notice requirements. The result? The employer remained bound by the group termination requirements even though the contract was silent on them. This result followed in the footsteps of several decisions of the Ontario Court of Appeal.

The result would have been different, however, had the termination clause purported to expressly exclude any statutory notice requirements. They’re statutory minimums; you can’t contract out of them.

Key takeaways

Termination clauses justifiably come under a lot of scrutiny when an employee is terminated without cause because, naturally, more notice means more money in the employee’s pocket-something that might be worth litigating. Therefore, employees have every incentive to search for problems with termination clauses, opening the door to more generous entitlements at common law.

In this case, the employee’s creative argument sought to penalize the employer for its silence about a hypothetical situation materializing that wasn’t mentioned in the contract but that allowed for a longer notice period. As it turns out, despite its silence on the issue, the employer is, by default, bound by what the statute says on group terminations if the situation materialized.

This should provide some comfort to employers, who might otherwise be concerned about drafting cumbersome termination clauses that capture every eventuality. When the contract remains silent about an issue, courts won’t imply a meaning that breaches minimum notice requirements.