The recent Court of Appeal decision in Christensen v. Family Counselling Centre of Sault Ste. Marie and District1 illustrates that ambiguity surrounding termination provisions will lead to decisions in favour of employees. Clear language will be required to rebut the common law presumption that an employee is entitled to reasonable notice.
Ruth Christensen had worked as a therapist at the Family Counselling Centre since May, 1990. Her employment was terminated in September, 1997, when the Centre had to downsize following provincial government funding cuts. On termination, Christensen was provided with ten weeks' pay, insurance benefits until the end of 1997 and a favourable letter of reference. The Centre volunteered to help Christensen find a new job and the trial judge found that it had not acted in bad faith in terminating Christensen's employment.
The parties agreed that Christensen's employment contract was the letter of offer that both she and the Centre had signed in May, 1990. Regarding termination, this letter set out a four-week notice of termination during the 6-month probationary period at the start of Christensen's employment. The letter also made reference to a staff manual, as follows:
The responsibilities of this position have been outlined and I am enclosing a staff manual which contains the conditions of employment and agency policies.2
The manual was not sent with the letter and Christensen testified that she did not ask for it on hire because she did not want to appear to be complaining before her employment had even begun. Following a request, Christensen received and read the manual during her first week at the Centre. The termination provisions it contained were never explained to her.
I examined a similar factual situation in a 1997 article for this publication*, which focused on the 1996 Ontario Court of Justice decision in Buerman v. Canada (Attornery General).3 Buerman provided that:
Employers should take pains to express their intentions in the event of termination clearly at the time the contract is negotiated The relevant termination clause should be carefully drafted and specifically incorporated in the letter of hire. It should be signed off by both parties before the relationship commences if the employer is to be confident of the enforceability of the clause.4
The Court in Buerman found that the employer's policy manual had never become part of the contract of employment and so its provisions could not be applied.
In Christensen, the trial judge found it unnecessary to answer the question of whether or not the Centre's policy manual formed part of Christensen's contract. Instead, the trial judge and the Court of Appeal focused on the wording of the policy manual's termination clause.
The manual, which was produced by the employer, provided for termination by the employee on one month’s written notice. Termination by the employer was to be:
[…] in writing from the Executive Director and the same ratios as above will apply, that is one month's notice to professional staff … and/or as established by legislation.
The manual also provided:
This Personnel Code is to be considered as a policy guideline setting for [sic] the minimum expectations of employment and benefits obtaining therefrom.5
The trial judge found that the termination clause was capable of at least four interpretations. Firstly, it might set a ceiling for termination pay of the lesser of either one month’s pay or the amount provided for in the Employment Standards Act,6 in which case the provision would be void when applied to Christensen. Secondly, it might provide for the greater of either one month's pay or the notice required by the ESA. Thirdly, it might provide for one month's notice and the notice or pay required by the ESA. Fourthly, it permitted an action for wrongful dismissal, but set a minimum of one month’s notice to be given in any event.
The ambiguity created by these numerous possible interpretations led the trial judge to conclude that the provision must be construed in favour of the employee. Christensen’s action for wrongful dismissal was allowed, and she was found to be entitled to the notice of termination provided for at common law.
In contrast to the decision of the trial judge, the Divisional Court held unanimously that the termination provisions set out in the policy manual were part of the employment contract. The Court awarded one month's notice plus seven weeks under the Employment Standards Act, because this was the interpretation most favourable to the employee.
On further appeal, the Court of Appeal held that the determinative factor was not whether the termination provisions in the manual were unfair, onerous, or the result of undue influence or a power imbalance, but whether the provision was sufficiently clear to rebut the common law presumption of reasonable notice. The Family Counselling Center could have removed Christensen's entitlement to common law notice and limited its obligations on termination to the notice provisions of the Employment Standards Act. However, to achieve this the Centre should have expressed this intention clearly and brought the clause to Christensen's attention when she was hired. An ambiguous notice provision cannot rebut the common law presumption that reasonable notice of termination must be provided.
As the provision was insufficiently clear, Christensen was awarded damages assessed on common law principles. The Court of Appeal agreed with the trial judge that eight months notice of termination should have been given.
Christensen emphasizes the need for clarity regarding termination provisions, whether termination is addressed in a letter of offer or an employer's policy manual. The Family Counselling Centre would have benefited from following the advice that flowed from the Buerman decision: to be effective, a termination provision must be both clearly expressed and brought to the employee's attention.
Janice Payne is a senior partner with Nelligan O'Brien Payne LLP in Ottawa, practising Employment Law.
(Originally published in the Executive Employment newsletter (Volume IX, No. 3)
© Janice Payne 2003
1Christensen v. Family Counselling Centre of Sault Ste. Marie and District,  O.J. No. 4418 (C.A.).
2 Ibid. at 4
*Executive Employment, Vol. IV, No. 2, p. 208
3Buerman v. Canada (Attornery General) (1996), 19 C.C.E.L. (2d) 127 (Ont.)
4 Ibid. at p.209
5 Supra note 1 at 5.
6Employment Standards Act, 2000 S.O. 2000 c. 41