In the recent case of Plotnikoff v. Associated Engineering Alberta Ltd. (2024 ABKB 706), the Alberta Court of King’s Bench affirmed lower court’s decision and delivered a decision that underscores critical aspects of employment law, including wrongful dismissal, reasonable notice, and the enforceability of termination clauses. This case has significant implications for employers and employees across Calgary, Edmonton, and beyond.
The Facts
The Plaintiff Employee was employed by the employer for nearly 10 years, was terminated without cause in April 2022. While the company provided six weeks’ pay as per Alberta’s Employment Standards Code, the court ultimately ruled that Mr. Plotnikoff was entitled to 10 months of reasonable notice under common law.
The central issues in this case revolved around:
- Whether the termination clause in Mr. Plotnikoff’s contract effectively displaced his common law right to reasonable notice.
- Whether his severance should be reduced due to insufficient efforts to mitigate his losses.
Key Legal Takeaways
- Termination Clauses Must Be Clear and Unambiguous
Employment contracts often include clauses that seek to limit employees to statutory minimum severance. However, the court ruled that the termination clause in this case failed to meet the high threshold of clarity required to displace common law rights. The termination clause in this case contained the following: “Termination without Cause: The Company may terminate employment without cause upon providing the Employee with notice as may be mandated by the Employment Standards legislation or such additional notice as the Company, in its sole discretion, may provide or, at our option, pay in lieu of such notice.”
Specifically, the Court said the following concerning the enforceability of the termination clause:
[82] I agree with the Trial Judge that the words “mandated by the Employment Standards legislation” in the first part of Clause 4(c) simply establishes Mr. Plotnikoff’s minimum period of notice and compliance with statutory requirements under the Code.
[83] I find that this wording in Clause 4(c) does not reference section 3 of the Code and does not contain any language to limit or extinguish Mr. Plotkinkoff’s common law rights. Therefore, that wording leaves open the ability of Mr. Plotnikoff to pursue his common law entitlements preserved under section 3 of the Code…
[84] I also agree with the Trial Judge that the wording “or such additional notice” in the second part of Clause 4(c) recognizes that a period of notice extending beyond the Code’s minimum requirements is a realistic possibility.
…
[89] With respect to the first part of Clause 4(c) “notice as may be mandated by the Employment Standards legislation”, Iacobucci J. held that the minimum notice periods set out in the Act do not operate to displace the presumption at common law of reasonable notice; and the common law presumption of reasonable notice is a “benefit”, which, if the period of notice required by the common law is greater than that required by the Act, will prevail over the notice period set out in the Act: Machtinger, at p 999-1000.
[90] With respect to the second part of Clause 4(c) “or such additional notice as the Company, in its sole discretion, may provide”, I find that the wording does not specify some other period of notice as required in the Nutting statement. In my view, it is silent as to the term of notice. It is open for the court to imply a term of notice. According to McLachlin J., the law says that where the contract is silent as to the term of notice upon dismissal, the court will imply a term of notice: Machtinger, at p 1007.
[91] In my view, the wording in Clause 4(c) “in its sole discretion” does not meet the “clear and unambiguous”, “clear and unequivocal” or “high level of clarity” binding test in Holm and Bryant required to limit or extinguish Mr. Plotkinkoff’s common law rights in the Agreement and preserved under section 3 of the Code.
[92] From the foregoing analysis, I agree with the Trial Judge’s conclusion that Clause 4(c), interpreted in the context of the Agreement as a whole, is insufficient to clearly and unequivocally limit or extinguish Mr. Plotnikoff’s right to common law reasonable notice implied in the Agreement and preserved under section 3 of the Code.
[93] In employment law, uncertainty ought to be resolved in favour of the employee and the reading more favourable to the employee must prevail: Holm, at para 34; Bryant, at para 18; Rizzo & Rizzo Shoes Ltd. (Re), 1998 CanLII 837 (SCC), [1998] 1 SCR 27 at para 36.
For employers, this highlights the importance of precise language in employment contracts. Ambiguous wording can expose employers to significant liability in wrongful dismissal claims.
- Statutory Minimums Are Not the Ceiling The court reaffirmed that Alberta’s Employment Standards Code sets minimum termination notice requirements, not maximums. Unless explicitly excluded, employees retain their right to claim additional severance under common law.
For employees, this means that even if an employer complies with statutory notice, you may still be entitled to more severance through a common law claim.
- Mitigation Efforts Must Be Proven by Employers While the court found that Mr. Plotnikoff’s job search efforts were lacking, it dismissed the employer’s argument due to insufficient evidence. Employers must prove both:
- That the employee failed to take reasonable steps to find comparable employment.
- That such employment opportunities existed and were reasonably attainable.
This two-part test places a significant burden on employers in wrongful dismissal cases.
Why This Case Matters
This decision is a critical reminder of the complexities of employment law and wrongful dismissal claims in Alberta and beyond.
- For Employers: Ensuring that employment contracts are clear, compliant with legal standards, and tailored to your business needs is essential to mitigating risks.
- For Employees: Understanding your rights under both statutory and common law is crucial when facing a termination. Even if you have received severance, it may not fully reflect what you’re entitled to.
How TZ Law Can Help
At TZ Law, we specialize in employment law, wrongful dismissal claims, and severance reviews. Whether you’re an employer seeking to draft enforceable contracts or an employee reviewing a severance offer, our experienced employment lawyers in Calgary, Edmonton, and Vancouver are here to help.
For Employees:
- Are you questioning whether your severance package is fair?
- Were you terminated without cause and need to understand your options?
For Employers:
- Are your employment contracts clear and legally enforceable?
- Do you need guidance on how to handle terminations to minimize legal risks?
We provide tailored, practical solutions to protect your rights and achieve the best outcomes.
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