Court of Appeal

Employee Subject to Employment Standards Act Despite Exemption

The BC Court of Appeal recently held that incorporation of the notice provisions of the Employment Standards Act into a collective agreement limited an employee’s entitlement to notice of termination even though he would have been excluded from the Act’s notice provisions if his position was not covered by the agreement.

The agreement, which was voluntarily recognized by the employer, set out the terms and conditions of employment of management and professional employees. When the employment of the grievor, a chartered accountant, was terminated during his probationary period, the agreement provided that he was only entitled to the pay in lieu of notice that he would otherwise have received under the Act, that is, one week’s pay.

At arbitration the Association representing the employee argued that the common law principles of reasonable notice should apply, rather than the less generous minimum standard under the Act, because chartered accountants are exempt from the Act. The arbitrator agreed and awarded the employee damages of more than $100,000.

The Supreme Court overturned the arbitral award on judicial review and the Court of Appeal upheld that decision. The Courts found that by incorporating the Act’s notice standards into the agreement, the parties had agreed to be bound by them. However, the Court also found that the parties were not bound by the exemptions in the Act, because they had only specifically incorporated the notice standards into the agreement, and not the Act as a whole.

This decision shows that when legislation is incorporated by reference into an employment agreement arbitrators must carefully consider the scope of the incorporation and the parties’ agreement as to how the legislation will be applied. Parties to an agreement must clearly express their intentions regarding specific provisions in incorporated legislation.

(Click here for copy of Decision)