In Sciancamerli v. Comtech (Communication Technologies) Ltd., 2014 BCSC 2140, a specialized salesperson was terminated without cause after 10 months’ service. He sued for wrongful dismissal. At trial, the main issues were the length of notice for a short-term salesperson and his entitlement, if any, to commission payments during the notice period. This case is a reminder to Canadian employers of the importance of carefully drafted language in employment contracts.
Regarding the period of reasonable notice, the judge followed the decision in Saalfeld, 2009 BCCA 19. For short-term employees in positions similar to the former employee in Sciancamerli, notice is likely to be two to three months subject to consideration of the impact of the Bardal factors of age, character of employment, and availability of alternate employment. In this case, the specialized nature of his work and the poor availability of alternate employment supported a conclusion that reasonable notice was five months.
The court then considered whether the former employee was entitled to commission as part of his pay in lieu of notice.
By way of background, absent an express contractual term, at common law an employee may be terminated without cause pursuant to the implied term of termination on “reasonable (working) notice” or pay in lieu. “Pay in lieu” is intended to put former employees in the same position they would have been in had they worked during the notice period. Thus, pay in lieu usually includes salary, benefits, RRSP contributions, commission, etc.
In this case, the court stated that the presumption that the terminated employee will be compensated as if he had worked the notice period may be rebutted by a clear and unambiguous term in the contract.
Here, the employee’s contract provided:
Participants who [are terminated] whether or not for cause will be paid their base salary through the agreed upon termination date. In addition, the Participant will be eligible only for commission payments earned prior to their last day of employment.
The court held that the termination date would be at the end of the period of reasonable notice. The “last day of employment” had to mean something different. In this case, the court held it meant the last day the employee worked. “Earned” was described in the Commission Plan as the time at which the sale was “closed, won and invoiced.”
Accordingly, when determining whether an employee was entitled to commission during the notice period, the implied term of pay in lieu of reasonable notice was rebutted by the contract. The court held that in this case under the clear terms of his contract, the former employee’s entitlement to commission was limited to sales “closed, won and invoiced” as of the date his active employment ceased.
Canadian employers are reminded that courts scrutinize contractual language purporting to limit employee entitlements during a reasonable notice period. As such, legal review of proposed contractual terms is suggested.
