Northern Exposure

British Columbia court offers more lessons about employment contracts

by Monique Orieux

Last year in Northern Exposure we shared five key lessons about Canadian employment contracts arising from the trial court’s decision in Miller v. Convergys CMG Canada Limited Partnership. The British Columbia Court of Appeal recently issued its decision in the case: Miller v. Convergys CMG Canada Limited Partnership, 2014 BCCA 311. Its decision reinforces those lessons. It also serves as a reminder that employment agreements should be tailored to the individual circumstances of each employee.

Facts

Gerry Miller had been employed by Convergys for 71/2 years when he was dismissed without cause. He was initially hired in 2003. In 2006, he was promoted to client services manager and signed a new employment contract. In 2010, he was promoted again to a senior client services manager but did not sign a new contract.

Issues

The issues argued by Miller largely focused on two clauses in the 2006 employment contract: 1) a probation clause whereby new employees were subject to termination without notice with no entitlement to severance during the first 90 days of employment; and 2) a severance clause that provided notice equal to the minimums set out in the British Columbia Employment Standards Act.

The core of Miller’s argument was that the probation and severance clauses were “inextricably intertwined” and operated together, the effect of which would be to breach statutory minimums for severance or, in the alternative, to create ambiguity in the severance clause.

Did the probation clause apply to Miller?

The court of appeal upheld the trial court’s decision that, because of Miller’s employment history with Convergys, the probation clause was not intended to apply. However, the court of appeal did draw attention to the inclusion of the probation clause in the employment contract. It noted that the clause raised a question of Convergys’ intent. Despite likely being inadvertently included as a “boilerplate” clause, the court of appeal highlighted the drafting oversight as causing some difficulty in interpreting the contract.

Could the probation clause be severed from the employment agreement?

Alternatively, the trial judge ruled that if Convergys intended the probation clause to apply to Miller, that the clause could be severed from the employment contract through a severability provision it contained.

The court of appeal upheld the trial decision. It concluded that the severability provision in the employment agreement allowed for individual clauses to be “read down” to the extent of their inconsistency or to be removed fully. The court of appeal went further and found the severability clause to be unambiguous and applicable. The clause stated that (i) each paragraph is a separate and distinct covenant, (ii) offending provisions are “read down” to the extent of the invalidity, and (iii) all other provisions remain in full force and effect.

Lessons for employers

The lessons to be learned from the decision include:

  • It confirms that the courts will enforce plain language agreements. It also demonstrates courts’ reluctance to reward technical arguments of contractual interpretation where the intent of the parties is clear. Employers should seek to draft employment agreements that are easily understandable and avoid technical mistakes that can result in ambiguity.
  • Employers should adapt employment agreements for the individual employee’s circumstances where necessary. Be cautious about including boilerplate clauses that may not be relevant to the situation at hand.
  • Severability provisions may provide the court with a means to alter an agreement to bring it in line with employment standards laws without having to discard an entire agreement or section of an agreement. However, there are limits to the courts’ willingness to sever part or all of a clause. Reliance on a severance provision should not be a first resort. See, for example, an earlier article in this publication: “Blue-Pencil Correction of Noncompete Gets Red Light from Canadian Court.”