Last year we shared five key lessons about employment agreements, arising from the trial court's decision inMiller v. Convergys CMG Canada Limited Partnership. The recent B.C. Court of Appeal decision in the same matter highlights those lessons. It also serves as a reminder that employment agreements should be tailored to the individual circumstances of each employee: Miller v. Convergys CMG Canada Limited Partnership, 2014 BCCA 311.
Miller had been employed by Convergys for 71/2 years when he was dismissed without cause. Miller was initially hired in 2003. In 2006, Miller was promoted to a Client Services Manager and signed a new employment agreement. In 2010, Miller was promoted again to a Senior Client Services Manager, but did not sign a new employment agreement.
The issues argued by Miller largely focused on two clauses in the 2006 employment agreement: 1) a probation clause whereby new employees were subject to termination without notice, with no entitlement to severance during the first 90 days of employment; and 2) a severance clause that provided notice equal to the minimums set out in the British Columbia Employment Standards Act.
The core of Miller's argument was that the probation and severance clauses were "inextricably intertwined" and operated together, the effect of which would be to breach statutory minimums for severance or, in the alternative, to create ambiguity in the severance clause.
Did the probation clause apply to Miller?
The Court of Appeal upheld the trial court's decision that, due to Miller's employment history with Convergys, the probation clause was not intended to apply. However, the Court of Appeal did draw attention to the inclusion of the probation clause in the employment agreement. It noted that the clause raised a question of Convergys' intent. Despite likely being inadvertently included as a "boilerplate" clause, the Court of Appeal highlighted the drafting oversight as causing some difficulty in interpreting the contract.
Could the probation clause be severed from the employment agreement?
Alternatively, the trial judge ruled that if Convergys intended the probation clause to apply to Miller, the clause could be severed from the employment agreement due to a severability provision found within it. The Court of Appeal upheld the trial decision. It concluded that the severability provision in the employment agreement allowed for individual clauses to be "read down" to the extent of their inconsistency, or be removed fully. The Court of Appeal went further and found the severability clause to be unambiguous and applicable. The clause stated that (i) each paragraph is a separate and distinct covenant, (ii) offending provisions are "read down" to the extent of the invalidity, and (iii) all other provisions remain in full force and effect.
Lessons for employers
The lessons to be learned from the decision include:
- It confirms that the courts will enforce plain language agreements. It also demonstrates the courts' reluctance to reward technical arguments of contractual interpretation where the intent of the parties is clear. Employers should seek to draft employment agreements that are easily understandable and avoid technical mistakes that can result in ambiguity.
- Employers should adapt employment agreements for the individual employee's circumstances, where necessary. Be cautious about including "boilerplate" clauses that may not be relevant to the situation at hand.
- Severability provisions may provide the court with a means to alter an agreement to bring it in line with employment standards laws, without having to discard an entire agreement or section of an agreement. However, there are limits to the courts' willingness to sever part or all of a clause. Reliance on a severability provision should not be a first resort. See, for example an earlier article in this publication: "Blue-Pencil Correction of Non-Compete Gets Red Light" (The HR Space, April 4, 2012).