Employment Contracts - Worth the Paper They’re Written On in Miller v. Convergys CMG Canada LP
December 3, 2013
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Note: Mr. Miller appealed the BC Supreme Court’s decision to the BC Court of Appeal. On July 31, 2014 the BC Court of Appeal decided that the severability and termination clauses applied to Mr. Miller. Mr. Miller applied to appeal the BC Court of Appeal’s decision to the Supreme Court of Canada. On February 5, 2015 the Supreme Court of Canada refused Mr. Miller’s application. Read McInnes Cooper’s: Court Confirms Employment Contract is Enforceable in Miller v. Convergys CMG Canada LP – 3 Key Lessons for Employers.
In a recent decision, the BC Supreme Court decided an employment contract – and its termination clause limiting the employee’s entitlement upon dismissal without cause to the employment standards requirements – is valid and enforceable. The decision demonstrates that while it may be tempting to take a “penny–wise” approach to employment offers and contracts, they are well worth the paper they’re written on – as long as the employer does it right:
- Use a Contract – With a Termination Clause. All employers benefit from the certainty – and cost savings – that written employment contracts with a “termination clause” provide.
- “Boilerplate” Protection. That “boilerplate legalese” can be very important in an employment dispute, giving a court the tools it needs to enforce contract terms against a disgruntled ex-employee.
- Amend With Care. Changing the employment contract terms after employment has started is risky business; employers are wise to seek the assistance of experienced employment law counsel.
- Cover the Basics. Generally speaking, courts will enforce employment contracts if the employer has covered the “basics” – in terms of both the content and implementation of the contract.
McInnes Cooper’s Tara Erskine represented the successful employer.
Convergys operates customer contact centres and provides services for third party clients around the world. Convergys hired Mr. Miller in its Kamloops, BC contact center, and subsequently promoted him several times. After just over 7 years, Mr. Miller was working as a Senior Manager Client Services from his home, with an increasing amount of travel to US client sites.
During his employment, Mr. Miller signed a series of written “employment offers” from Convergys in relation to various of his promotions. Each included a clause – commonly called a “termination clause” – stating an employee dismissed without cause is only entitled to the minimum notice entitlements that the BC employment standards legislation requires. Each also included clauses stating the contract would continue to apply even if the employee’s role changed, and allowing unenforceable terms to be severed from the contract. However, Convergys had not asked Mr. Miller to sign a new employment offer when it offered him the last promotion to Senior Manager Client Services.
Convergys decided to relocate Mr. Miller’s job to the US, but Mr. Miller could not move for personal reasons. Convergys tried unsuccessfully to find Mr. Miller an alternate position. It ultimately gave him notice that his employment was terminated without cause, and the seven weeks’ pay in lieu of notice to which he was entitled under BC’s employment standards legislation. Mr. Miller sued Convergys for wrongful dismissal. He claimed he was entitled to 12 months’ reasonable notice (and thus pay in lieu of such notice) and punitive damages for the manner in which Convergys effected the employment termination.
CONTRACT – AND “TERMINATION CLAUSE” – STAND
The BC Supreme Court decided there was an enforceable employment contract – and termination clause – between Convergys and Mr. Miller.
An enforceable written employment contract. The Court agreed with Convergys that Mr. Miller’s last promotion simply had not changed his employment conditions so substantially that the last written contract he signed no longer applied. Furthermore, the contract expressly stated it would continue to apply even if the employee’s role changed.
Unambiguous termination clause. The Court decided the termination clause was clear and unambiguous. The fact the clause did not say Mr. Miller was only entitled to the minimum notice under employment standards legislation did not imply he could be entitled to more; on a plain reading, he was entitled to the minimum notice provided in the legislation. The Court was also clear that Convergys’ attempt to settle any potential claims by “sweetening the severance package” does not mean it did not intend to rely on the written contract.
The employment contract complied with employment standards legislation. The Court rejected Mr. Miller’s argument that the contract breached the employment standards legislation – and was thus unenforceable – because the probationary clause did not include a notice period in the first 3 months. Since Mr. Miller had been an employee for over three years when he signed the last contract, the probationary clause just didn’t apply to him – and thus there was no actual or potential disadvantage to him. Even if it could be construed as improperly imposing another “without notice” probationary period in relation to his last promotion, the Court could sever that probationary clause from the contract as unenforceable under the contract’s “severability” term.
The employment contract was not unconscionable. The Court also rejected Mr. Miller’s argument – on several grounds – that his employment contract was unconscionable. The Court noted he had already signed two nearly identical contracts, and all three times the contracts were written in plain language; Mr. Miller had time to read them over, consider their terms, take advice and ask questions; and Convergys offered all contracts without pushing Mr. Miller to sign immediately or applying other undue pressure.
Click here to read the BC Supreme Court’s decision in Miller v. Convergys CMG Canada LP.
EMPLOYMENT CONTRACTS: WORTH THE PAPER THEY’RE WRITTEN ON
The common law (as opposed to employment standards legislation, and which applies in all Canadian Provinces and Territories except Quebec) presumes an employee is entitled to “reasonable notice” of termination – but the parties can agree to some other period of notice. Courts believe that, generally, there is a power imbalance between employers and employees; they therefore carefully scrutinize termination clauses. However, the decision in Miller v. Convergys confirms that if an employer does things right, an employment contract – and termination clause – are well worth the paper they are written on:
- Use a Contract – With a Termination Clause. Every employer – large and small – will benefit from using written employment offers or contracts that include a provision addressing notice of termination in the event of without cause termination. A well drafted termination clause gives both the employer and the employee certainty respecting what the employee will receive if and when his employment ends without cause – and can save employers thousands of dollars in both pay in lieu of notice and legal fees.
- “Boilerplate” Protection. What sometimes seems to be “boilerplate legalese” in an employment contract – like the severability term in Miller v. Convergys – can prove to be very important in a dispute with the employee, especially if it goes to court: it can provide the court with the tools to find essential harmony between the contract language and an interpretation that is compliant with the employment standards legislation, and enforceable against the claims of a disgruntled ex-employee.
- Amend With Care. Changing the terms of an employment contract – whether to bring an otherwise unenforceable termination clause into compliance, or for some other reason like a promotion or a transfer – after the employment has started, is risky business. Employers would be wise to seek the assistance of experienced employment law counsel.
- Cover the Basics. Generally speaking, courts will enforce employment contracts if the terms are clear, internally consistent, unambiguous, the employer gave the employee time to consider the contract before he signed it, and it complies with the applicable employment standards legislation.
It is tempting for employers to take a “penny–wise” approach to employment offers and contracts – and save the related time and legal expense to create and implement well-drafted documents. However, this approach can cost pounds in the end: the saved costs often pale in comparison to the required payout – and the legal expenses to negotiate or even litigate a resolution. It is impossible to completely eliminate the risk of litigation, but a well drafted employment offer or contract can significantly reduce that risk or increase the chances of success if litigation is unavoidable.
Please contact your McInnes Cooper lawyer or any member of our McInnes Cooper Labour and Employment Team to discuss this topic or any other legal issue.
McInnes Cooper has prepared this document for information only; it is not intended to be legal advice. You should consult McInnes Cooper about your unique circumstances before acting on this information. McInnes Cooper excludes all liability for anything contained in this document and any use you make of it.
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