Nobody Cares About Your (Unilateral) Life Plans: Lessons From the Great White North
April 2017
Article by:
Brandon Hillis
Previously printed in the LexisNexis Labour Notes Newsletter.
A recent decision of the Yukon Court of Appeal provides some valuable commentary about the role (or lack thereof) played by one’s personal plans in determining the appropriate length of notice for a dismissed employee.
Background
On April 3, 2013, Lesley Cabott commenced employment with Urban Systems Ltd. and was tasked with working out of the company’s new Whitehorse office. Urban Systems hired Ms. Cabott – a resident of Whitehorse with extensive work experience in the Yukon’s private and public sectors – because it wished to expand its business in the North.
Ms. Cabott accepted employment with Urban Systems because she felt that the opportunities for work and advancement were better than with her previous employer, with which she had become disenchanted. She also apparently accepted the job because she viewed working with Urban Systems as an opportunity to trade in her parka for a rain jacket and move to Vancouver, where she wanted to move and eventually retire.
The employment relationship unfortunately did not proceed as the parties had hoped and, within 13 months, Ms. Cabott’s employment was terminated.
She was provided with 3.5 months of pay in lieu of notice.
Yukon Supreme Court
The Yukon Supreme Court held that despite Ms. Cabott’s short period of employment, the severance provided by Urban Systems was deficient.[1]
In arriving at this conclusion, the Court focused on a number of factors, including Ms. Cabott’s age and specialized skills. In addition, consideration was given to the “attraction of eventual transition of work with the defendant to Vancouver until retirement”, which the Court found to be a factor that enticed Ms. Cabott to take up employment with Urban Systems in the first place and one which warranted an extension of the notice period. Given these considerations, the Court concluded that the appropriate period of notice in the case was six months.
Yukon Court of Appeal
Urban Systems appealed the decision of the Supreme Court, and took the position that the damages award was excessive. A unanimous Yukon Court of Appeal agreed.[2]
In overturning the original damages award and after acknowledging Ms. Cabott’s skills and responsibilities, the Court of Appeal noted that there was no evidence to support the suggestion that her age warranted an extension of the notice period and, most significantly, found that the Court erred in referring to Ms. Cabott’s expectation of a possible transition of work and retirement in Vancouver as a factor warranting an extension of the notice period.
The Court of Appeal found that there was no evidence that Ms. Cabott’s desire to move to or retire in Vancouver ever factored into contractual discussions with Urban Systems or formed part of the employment contract. Indeed, the Court of Appeal found just the opposite: Ms. Cabott had been hired for the specific purpose of advancing Urban Systems’ business in the North.
Accordingly, the Court of Appeal determined that Ms. Cabott’s unilateral life plans should not have entered into the assessment of the appropriate period of notice. In order for her life plans to have played a role in determining rights or obligations upon termination, such plans would have had to be expressed in the employment contract or form part of the employment relationship. In the end, the notice award was reduced from six months to four.
Lessons for Employers and Employer Counsel
This case is valuable for a number of reasons, including the fact that it provides a valuable means of responding to dismissed employees (and their counsel) when they attempt to use their individual retirement plans as a basis upon which to increase severance demands. Employees and their counsel often attempt to use such tactics in the course of negotiations. This case clearly provides that unless retirement or other unilateral life plans are somehow incorporated into the contract, they are irrelevant for the purposes of determining one’s entitlement to notice of termination or pay in lieu thereof.
This case also serves as a valuable reminder to employers to be careful about what they say when hiring employees. While the employer in this case was successful, employers can expose themselves to substantial liability when dismissing employees to whom they made, for example, representations of long-term or secure employment. This is particularly true when employees leave previous secure employment to take what appears to be a good opportunity with the new employer.
Employers can mitigate their risk by limiting what they say (as Urban Systems appeared to do in this case) and by drafting employment contracts containing clear “entire agreement” and termination clauses.
[1] Cabott v. Urban Systems Ltd., 2015 YKSC 25.
[2] Cabott v. Urban Systems Ltd., 2016 YKCA 4.
April 2017
Previously printed in the LexisNexis Labour Notes Newsletter.
A recent decision of the Yukon Court of Appeal provides some valuable commentary about the role (or lack thereof) played by one’s personal plans in determining the appropriate length of notice for a dismissed employee.
Background
On April 3, 2013, Lesley Cabott commenced employment with Urban Systems Ltd. and was tasked with working out of the company’s new Whitehorse office. Urban Systems hired Ms. Cabott – a resident of Whitehorse with extensive work experience in the Yukon’s private and public sectors – because it wished to expand its business in the North.
Ms. Cabott accepted employment with Urban Systems because she felt that the opportunities for work and advancement were better than with her previous employer, with which she had become disenchanted. She also apparently accepted the job because she viewed working with Urban Systems as an opportunity to trade in her parka for a rain jacket and move to Vancouver, where she wanted to move and eventually retire.
The employment relationship unfortunately did not proceed as the parties had hoped and, within 13 months, Ms. Cabott’s employment was terminated.
She was provided with 3.5 months of pay in lieu of notice.
Yukon Supreme Court
The Yukon Supreme Court held that despite Ms. Cabott’s short period of employment, the severance provided by Urban Systems was deficient.[1]
In arriving at this conclusion, the Court focused on a number of factors, including Ms. Cabott’s age and specialized skills. In addition, consideration was given to the “attraction of eventual transition of work with the defendant to Vancouver until retirement”, which the Court found to be a factor that enticed Ms. Cabott to take up employment with Urban Systems in the first place and one which warranted an extension of the notice period. Given these considerations, the Court concluded that the appropriate period of notice in the case was six months.
Yukon Court of Appeal
Urban Systems appealed the decision of the Supreme Court, and took the position that the damages award was excessive. A unanimous Yukon Court of Appeal agreed.[2]
In overturning the original damages award and after acknowledging Ms. Cabott’s skills and responsibilities, the Court of Appeal noted that there was no evidence to support the suggestion that her age warranted an extension of the notice period and, most significantly, found that the Court erred in referring to Ms. Cabott’s expectation of a possible transition of work and retirement in Vancouver as a factor warranting an extension of the notice period.
The Court of Appeal found that there was no evidence that Ms. Cabott’s desire to move to or retire in Vancouver ever factored into contractual discussions with Urban Systems or formed part of the employment contract. Indeed, the Court of Appeal found just the opposite: Ms. Cabott had been hired for the specific purpose of advancing Urban Systems’ business in the North.
Accordingly, the Court of Appeal determined that Ms. Cabott’s unilateral life plans should not have entered into the assessment of the appropriate period of notice. In order for her life plans to have played a role in determining rights or obligations upon termination, such plans would have had to be expressed in the employment contract or form part of the employment relationship. In the end, the notice award was reduced from six months to four.
Lessons for Employers and Employer Counsel
This case is valuable for a number of reasons, including the fact that it provides a valuable means of responding to dismissed employees (and their counsel) when they attempt to use their individual retirement plans as a basis upon which to increase severance demands. Employees and their counsel often attempt to use such tactics in the course of negotiations. This case clearly provides that unless retirement or other unilateral life plans are somehow incorporated into the contract, they are irrelevant for the purposes of determining one’s entitlement to notice of termination or pay in lieu thereof.
This case also serves as a valuable reminder to employers to be careful about what they say when hiring employees. While the employer in this case was successful, employers can expose themselves to substantial liability when dismissing employees to whom they made, for example, representations of long-term or secure employment. This is particularly true when employees leave previous secure employment to take what appears to be a good opportunity with the new employer.
Employers can mitigate their risk by limiting what they say (as Urban Systems appeared to do in this case) and by drafting employment contracts containing clear “entire agreement” and termination clauses.
[1] Cabott v. Urban Systems Ltd., 2015 YKSC 25.
[2] Cabott v. Urban Systems Ltd., 2016 YKCA 4.