British Columbia: Supreme Court Verdict Impacts Termination Clauses

British Columbia: Supreme Court Verdict Impacts Termination Clauses

The British Columbian Supreme Court has ruled in favor of employees being provided common law reasonable notice even if an employer terminates or retracts the offer before the employee starts working. In Buchanan vs. Introjunction Ltd., 2017 BCSC 1002, the court ruled that the plaintiff was wrongfully dismissed and consequently awarded him six weeks’ pay in lieu of notice.

Outline of the Ruling

In October 2017, Colton Buchanan received and executed a formal employment contract with Introjunction; however, the offer was retracted days before his start date. Mr. Buchanan filed for wrongful dismissal and sought four month’s pay in lieu of notice for termination of employment. The claim was refused. The company argued the employment contract included a three-month probation period, thus it could rely on provisions related to this probation period.

Canadian court proceedings in the past have established that employees are entitled to reasonable notice if they are terminated – even before commencing work – or do not receive payment in lieu of notice. In Buchanan v. Introjunction Ltd., the employer argued that since the employment contract with Mr. Buchanan contains a clause specifying a three-month probationary period, this provision circumvented the need to pay for a lack of notice.

The court disagreed on the following grounds.

  1. The probation period was to commence on November 1, 2016, while Introjunction’s CEO retracted the company’s offer on October 29, 2016. Therefore, the probation period had not been engaged.
  2. The court affirmed that even if the provision of probation was applicable, there was no assessment or evaluation of the employee, which could give the employer reasonable grounds for termination without payment.

The court’s ruling found it clear the employer did not honor the terms specified in the employment contract and by “retracting” the offer, the employer breached was in the wrong. This is a key legislative change to note for employers with employees in British Columbia.

Key Takeaways

This ruling sets a significant benchmark in preparing employment contracts in British Colombia. It is important for employers to be cautious of terminating and/or rescinding an offer of employment, as there are significant monetary risks associated.

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