A recent decision of the British Columbia Court of Appeal serves as an important reminder to employers that termination obligations, even for very short-term employees, can be significant.
In Pakozdi v. B & B Heavy Civil Construction Ltd., the B.C. Court of Appeal considered the following facts.
David Pakozdi was employed as a bid estimator for a civil construction company for a period of 12 months. He was terminated without cause and was provided with severance pay roughly equal to two weeks’ notice. Pakozdi was approximately 55 years of age.
Pakozdi brought a claim against the company for wrongful dismissal and was initially awarded a notice period of five months by the B.C. Supreme Court trial judge, based on his experience, age, and length of employment.
The trial judge also awarded an additional three months notice, on the basis that Pakozdi’s physical and mental condition would make it more difficult for him to obtain new employment and that this vulnerability was known to the company.
The B.C. Court of Appeal, in part, allowed the company’s appeal and concluded that because the employee was able to perform consulting work after his termination, that there was no basis in law to increase the period of reasonable notice by an additional three months based on health considerations.
However, the Court of Appeal did uphold the decision of the trial court judge to award a notice period of five months.
The Court of Appeal reviewed a number of other previously decided British Columbia decisions in which notice periods in the range of three to four months were awarded in short employment cases. The court summarized its findings as follows:
"In my view, the initial assessment by the trial judge that the applicable notice period is five months is within the range of reasonableness having regard to this jurisprudence, though perhaps on the high side. Adding three months of the respondent’s vulnerability takes the notice period outside the range of reasonableness unless there are very special circumstances that could support this assessment."
The B.C. Court of Appeal decision in Pakozdi amply demonstrates that British Columbia courts may award significant notice periods even for very short-term employees.
Employers are legally able to limit liability in without-cause terminations by contractually establishing notice and severance entitlements in the employment agreement. However, to be enforceable, contractual notice and severance provisions must at least meet or exceed the applicable employment standards minimum requirements.
In addition, such contract provisions should be negotiated prior to the commencement of employment. Where such provisions are negotiated after the commencement of employment, it is important that consideration be provided, for example, an increase in compensation or benefits.
For more information:
- Pakozdi v. B & B Heavy Civil Construction Ltd., 2018 CarswellBC 69 (B.C. C.A.).
N. David McInnes is a partner with McMillan LLP in Vancouver. He is co-chair of the firm's Employment and Labour Law group and the Privacy Law group, as well as a member of the Commercial Litigation group. He can be reached at (604) 691-7441 or firstname.lastname@example.org. Hilary D. Henley is an associate with McMillan LLP's Advocacy and Employment group in Vancouver. She can be reached at (604) 893-7640 or email@example.com. McMillan LLP can be reached by visiting www.mcmillan.ca.