- The case is here: Pisko v. Trican Well Service Ltd., 2016 ABQB 500
- Plaintiff worked for Defendant for more than 11 years
- Entered into “most recent employment contract” on February 26, 2014
- The work for Trican was performed in Saudi Arabia
- Pursuant to the Agreement:
- Employee entitled to base salary plus a “Rotational Assignment Allowance” of 25% of base salary for working in Saudi Arabia
- Employee was entitled to (i) working notice of 60 days; (ii) pay in lieu of working notice equal to 60 days of base salary (excluding RAA); or (iii) a combination of working notice and pay in lieu of notice equivalent to 60 days of pay (excluding RAA)
- offending terms could be severed from the contract
- Employee was terminated and paid 60 days of base salary PLUS the equivalent RAA (despite the exclusion found in the agreement)
- Employee sued, arguing that the termination provisions in the Agreement were unenforceable because they fell below the requirements set out in the Employment Standards Code
- The Employer applied for summary dismissal, arguing (1) that the RAA did not constitute wages and, therefore, the termination provisions did not fall below the ESC standards (2) if the RAA did constitute wages, the termination provisions could be saved by the severance clause
- The Master found that the RAA did constitute “wages” as defined in the ESC and that a failure to pay the RAA would fall below the ESC standards. However, using some mental gymnastics, he found that the notice period requirement of the Agreement (60 days notice) was a separate issue from the methodology for calculating “wages” and, accordingly, was valid and enforceable.
- As the Employer paid the Employee the equivalent “wages” he would have received had he been given 60 days working notice, the Master granted summary dismissal of the Employee’s action
This is a strange decision.
Something that is not addressed in the decision is whether the Employee was given some consideration in exchange for entering into a new agreement many years into his employment. If he didn’t receive consideration, it could have been argued that the Agreement in question was not enforceable.
I don’t agree with the Master’s choice in enforcing the 60 day notice period but ignoring the Agreement’s exclusion of the RAA as a part of calculating termination pay. This is exactly what the SCC in Machtinger wanted to avoid: a situation where an employer can “get away” with having a clause which requires less than is required by the Code. For example, using the Master’s logic, an employer could draft a contract agreeing to pay an employee minimum wage plus Bonus X for services performed AND provide for the ability to terminate upon paying the equivalent of X days of notice (calculated using only the minimum wage base salary). In such a situation, I suspect many employers would attempt simply to pay the minimum wage salary multiplied by the X days of notice. If confronted about this (ie the employee incurs the expense of legal advice), the employer could just say “my bad” and pay the Bonus X multiplied by the X days of notice… even if it works only 50% of the time, that could add up to a pile of money that should have been paid to terminated employees.