Clear language in termination clause snuffs out worker’s claim for common law notice

Clear language in the clause is key

An Alberta court has dismissed a terminated worker’s claim for additional severance pay and notice because of a termination clause in his contract that clearly limited his entitlement to the legislative minimums.

Michael Nutting started working for Franklin Templeton Investments Corporation (FTIC) in December 2009. He had an employment contract that included a termination provision stating that “your employment may be terminated at any time without cause upon the provision by FTIC of the minimum notice of termination, or pay in lieu of notice, benefits and, if applicable, severance pay prescribed by applicable employment standards legislation in the province in which you are employed.” The contract went on to stipulate that providing such notice or pay in lieu of would constitute “full and final satisfaction of all rights or entitlements which you may have arising from or related to the termination of your employment.”

In addition to the termination clause, Nutting’s employment contract included a note that it and his offer letter “collectively comprise all of the terms of your employment with FTIC” and he acknowledged as such.

On April 12, 2012, FTIC terminated Nutting’s employment after almost two-and-one-half years. The company provided him with the amount of pay in lieu of notice required by the Alberta Employment Standards Code — two weeks’ notice for employees with service of more than two years but less than four years.

Nutting filed a claim for additional compensation, arguing he was entitled to additional severance pay because his employment contract didn’t eliminate his entitlement to common law reasonable notice of dismissal. He also claimed damages for intentional infliction of emotional distress, loss of reputation, expenses in securing other employment, and an unpaid signing bonus. In addition, Nutting applied for summary judgment in his favour, while FTIC cross-applied for summary judgment to dismiss Nutting’s claim.

The court found that the language of the employment contract was unambiguous and clearly limited Nutting to the minimum notice required by the Employment Standards Code. It noted that termination clauses were permitted to do away with “the presumption of reasonable notice” under the common law, as long as they didn’t violate the minimum notice periods stipulated in legislation and clearly stated that was the intention.

The court referred to previous decisions where it had been established that employment contracts could limit notice to the employment standards minimums for dismissal without cause. The test for enforcing such clauses was whether they “expressly or implied specify ‘some other period of notice.’”

The court pointed to examples of ambiguous wording that wouldn’t exclude common law notice entitlement — such as using the words “in accordance with” the minimum requirements. This allowed payment of legislative minimums, but providing common law notice could also be “in accordance” with legislation, so such a phrase was “essentially meaningless,” said the court.

Since the language in Nutting’s employment contract with FTIC specifically limited his entitlement to the notice of termination or pay in lieu with benefits along with severance pay “prescribed by applicable employment standards legislation,” there was no doubt as to the intention, said the court. In addition, the wording specifically referred to the section of the code that itself “prescribes certain minimum notice requirements.”

The court also found that Nutting’s contract went to further lengths to ensure the clarity of its termination clause by including a statement that the provision of legislative notice, benefits and severance pay minimums constituted “full and final satisfaction of all rights or entitlements” related to the termination of his employment.

As for Nutting’s claim for additional damages for emotional distress and other expenses, he didn’t provide any evidence supporting it. As a result, the court summarily dismissed the entirety of Nutting’s claim.

“(FTIC) has demonstrated that the agreement contains a valid clause concerning notice of termination which meets the legal test for enforceability in that it: provides a prescribed period of notice which does not violate the minimums imposed by statute; and expressly provides the parties’ intention that the prescribed notice would oust any other notice requirement that may have otherwise been implied,” said the court. See Nutting v. Franklin Templeton Investments Corp., 2016 CarswellAlta 2279 (Alta. Q.B.).

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