Supervisor awarded $10,000 in overtime

Employment contract purported to cover ‘any and all hours worked’

The Manitoba Court of Appeal has upheld a ruling awarding a supervisor $10,000 in unpaid overtime, a move that has the employer calling for legislative changes.

Sharon Michalowski, a former retail merchandise supervisor at Nygard International in Winnipeg, was hired by the company in December 2001. Before starting, she signed an employment contract outlining conditions of her employment that stated:

Duties: In your position as Retail Merchandise Supervisor, you are responsible for supervising the Managers of the Retail Stores in your region and to provide them with instruction, training, and such other assistance or direction as may be necessary for the development of the stores and such other duties as are ordinarily associated with that capacity or as may from time to time be assigned to you. As well, you are responsible for the timely and efficient performance of responsibilities as outlined in your Nygard International Retail Merchandise Supervisor Manual. In this position, you are responsible for reporting to Michael Smallwood on a Corporate level and Paul Yogis on a day to day basis and will work out of the Polo Park Bianca Nygard store until notified otherwise. Your salary is commensurate with the duties expected of you in this capacity, and is inclusive of all hours required to be worked to fulfill these duties.

Termination: The notice period to terminate this agreement will be 30 days, in writing, by either party. In the event that you choose to terminate this agreement, the Company reserves the right to accept your termination immediately without further remuneration. No “forced termination implication” would be applicable in this clause in any manner.

Michalowski’s annual salary was $42,000 plus commission on sales, a store profitability bonus and clothing and car allowances.

On Jan. 28, 2003, she handed in her resignation to Yogis. On Jan. 30, the employer exercised its right under the termination clause of her contract to terminate her employment immediately without further compensation.

Michalowski filed a wage complaint under Manitoba’s Employment Standards Code. The employer was ordered to pay her $10,240.68 for wages owed to her. The employer appealed that order to the Manitoba Labour Board.

The board ruled that Michalowski was told by Yogis in discussions before the employment contract was signed that she would not be entitled to overtime pay, but that she was “promised” that she would be compensated for extra hours with time off in lieu of overtime pay.

The board also accepted Michalowski’s testimony that although she had never put in a written claim for overtime during her employment, her requests for time off in lieu of overtime were not granted. (Particulars of those requests and when and to whom they were made are not found in the reasons of the board.)

Why she was awarded overtime pay

In its ruling, the board said it “has clearly stated that it does not accept that an employment agreement that presumes to establish compensation for ‘any and all hours worked’ is consistent with employment standards legislation.

“A contract of employment entered into between an employer and an employee must clearly indicate the number of hours of work and the rate of pay. In this case, the term of the employment contract that presumes to provide a salary, ‘inclusive of all hours required to be worked’ is inconsistent with the code. This amounts to an attempt to ‘contract out’ of the code’s provisions relating to hours of work and overtime wages.”

The board said it was satisfied that the salary paid to Michalowski was based upon 40 hours per week. Therefore, she was entitled to payment, at overtime rates, for hours worked in excess of the standard hours of work established by the code.

Why she was entitled to wages in lieu of notice

The board also awarded her wages in lieu of notice. The code provides that an employer and its employees may vary the notice period by agreement.

“However, the code certainly does not expressly state that such an agreement may provide two different notice periods — one for the employer and another for employees — nor does it indicate that, upon receipt of an employee’s resignation, an employer may terminate the employee immediately without further remuneration,” the board said. “It merely allows parties the flexibility to choose a notice period other than the one pay period of notice established by s. 61 (of the code).”

Therefore, the portion of the employment agreement allowing the employer to immediately terminate her employment following receipt of her resignation was null and void, the board ruled.

The Court of Appeal upheld the board’s ruling in a unanimous decision released on Oct. 12. In an interview with the Winnipeg Sun, Michalowski, a single mother of two, said she found the constant evening and weekend work unbearable and she never expected to become a lightning rod for overworked and underpaid employees.

“When I first started this it was about the money,” she said. “I wanted them to pay the money that was owed to me. But as time went on, I realized it was much more than that.”

In a written statement, Sharon Clarke, a spokesperson for Nygard, said the company was extremely disappointed with the decision and is considering an appeal to the Supreme Court of Canada.

“The effect of the labour board’s decision is to place Manitoba at a competitive disadvantage with other provinces and jurisdictions,” said Clarke. “Now in Manitoba, it is extremely difficult to fashion a rewarding compensation package … which takes into account the need for skilled and dedicated employees to work above the standard 40-hour work week. We call upon the provincial government to address this serious issue through legislative change.”

Nygard is currently facing another lawsuit over unpaid overtime from another employee. Maria Velho, a tailor supervisor who had been with the company since 1982 and was fired in May, is suing for wrongful dismissal and about 500 hours of overpaid overtime. None of those allegations have been proven in court.

For more information see:

Nygard International Partnership Associates v. Michalowski, 2006 CarswellMan 329, 2006 MBCA 115 (Man. C.A.)

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