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Here We Go Again: Employer Ordered to Pay $65,250 to Employee Who Did Not Work For Even One Day!

By now we all know that Courts are reluctant to enforce provisions in employment contracts that seek to limit the amount of termination notice provided to employees. A recent British Columbia Supreme Court decision serves as a stark reminder for employers of the lengths to which Courts will go to avoid restricting the notice entitlements of employees.

In DeGagne v. Williams Lake (City), Donald DeGagne entered into an employment agreement with the City of Williams Lake. The agreement provided for a six-month probation period and one month’s notice of termination should DeGagne have been terminated within the probation period:

The Probationary Period will be six (6) months… The City may terminate the Employee's employment without just cause by… providing the Employee 1 month written notice of termination if the employment is terminated during the 6 month probationary period [or by] providing the Employee 6 months' written notice of termination if the employment is terminated during the first year of this Agreement… [Emphasis added].

According to the agreement, DeGagne was to start his employment on March 1, 2013. However, in unusual fashion, DeGagne was dismissed on February 27, 2013, subsequent to the agreement’s execution but prior to the commencement of his employment.

Relying on the terms of the agreement, the City provided DeGagne with one month’s salary in lieu of notice of termination. In response, DeGagne brought a Claim for wrongful dismissal against the City based on, among other things, his notice entitlement.

At trial, the City took the seemingly reasonable position that because DeGagne had agreed to a one-month notice period during the probationary period he could not reasonably have anticipated that he would be entitled to a greater severance payment if the employment contract was terminated before he commenced his employment.

The Court rejected the City’s argument, declining to take into consideration the intentions of the parties. Instead, it based its decision on the “plain and ordinary meaning of the words” in the agreement. On that basis, the Court determined that since DeGagne had not yet started to perform his employment duties, he never embarked on any probationary period. Accordingly, the one month termination notice clause in the Agreement addressing the probationary period did not apply.

The Court awarded DeGagne 6 months’ notice based on both the language in the agreement and as a result of Mr. DeGagne’s 57 years of age and 25 years of prior experience in his field.

Take home for employers:

Most employment agreements do not expressly consider the specific period of time after an employee is hired but before her or his first day of work.  Although this decision was guided in large part by the specific termination language, employers should consider additional notice language in the employment agreement that contemplates a scenario where the employee does not commence employment.

Importantly, employers should ensure all employee terminations are reviewed with an experienced employment lawyer and employment agreement templates are revised regularly.

The lawyers at CCPartners are well versed in navigating employee terminations as well as drafting and revising employment agreements including termination provisions that will withstand judicial scrutiny and reduce exposure for employers. Click here for a list of experienced lawyers at CCPartners who can help.