Pisko v Trican Well Service Ltd, 2016 ABQB 500

Court of Queen’s Bench of Alberta Citation: Pisko v Trican Well Service Ltd, 2016 ABQB 500 Date: 20160906 Docket: 1501 14853 Registry: Calgary Between: Nigel Pisko Plaintiff - and - Trican Well Service Ltd. Defendant _______________________________________________________ Memorandum of Decision of J. Farrington , Master in Chambers _______________________________________________________ The Facts [ 1 ] This is a wrongful dismissal action in which there are cross

summary judgment applications. [ 2 ] The plaintiff employee worked as a maintenance coordinator for the defendant Trican Well Service Ltd. (“Trican”) in various capacities for more than 11 years. He entered into his most recent employment contract by letter agreement with Trican dated February 26, 2014. The type of contract is referred to between the parties as a “Rotational Employment Contract”. The work for Trican under the contract was done in Saudi Arabia. When Mr. Pisko was not scheduled to work, he was generally in Canada. The rotations were on approximate 30 day intervals. [ 3 ] Mr.

Pisko was given a general notice that his employment might be ending as a result of cessation of Saudi Arabia operations on or about August 12, 2015. He was told at the time that Trican was looking at reassignment opportunities, but if nothing suitable could be found his employment would be terminated. He was then told specifically by letter dated September 10, 2015 that there were no reassignment opportunities, and he was given formal notice of his termination in writing.

The notice that was given was a combination of 16 days working notice terminating his employment effective September 26, 2015, and he was also told that there would be a payment in lieu of notice. He was advised at the time that his final pay would include payment based upon the notice period in his employment contract.

[ 4 ] The plaintiff says that his employment contract does not comply with the Employment Standards Code , RSA 2000, c E-9, and that he therefore has no enforceable agreement with respect to notice and pay in lieu of notice, and that the normal common law rules in relation to reasonable notice and the assessment of the notice period and damages apply. The defendant says that there is an enforceable employment contract, and that it has done more than what is required under the employment contract, and that it has fully fulfilled its obligations to Mr.

Pisko. [ 5 ] I must determine whether I can determine this matter summarily, and if I can determine it summarily, which position is correct. There are no significant facts in dispute. The questions are primarily legal ones, and a determination must be made as to whether there is a sufficient factual matrix on the record before me to resolve the matter summarily. The Employment Contract [ 6 ] The essential terms of the employment contract that have a bearing on the issues before me are: Clause 9: Compensation-your base salary will be $110,652.00 per year (“Base Salary”).

In addition, you will receive a Rotational Assignment Allowance (“RAA”) of 25% of your base salary in accordance with the Rotational Policy, bringing your total compensation to $138,315.00 per year, less applicable statutory deductions. The RAA percentage is subject to change in Trican’s sole discretion. Clause 14: Termination-In the event that this Agreement or your employment is terminated by Trican after completion of your probationary period, for any reason other than cause, Trican will provide you with either: (

i) sixty (60) calendar days notice of such termination, i.e. the equivalent of one full rotation; or (ii) a severance payment equivalent to sixty (60) calendar days of your Base Salary, excluding the RAA and less applicable statutory deductions; or (iii) a combination of notice and Base Salary, excluding the RAA and less applicable statutory deductions, equivalent to sixty (60) calendar days total.

Clause 19: Severability-If any provision of this Agreement is determined to be void or unenforceable in whole or in part, it will not be deemed to affect or impair the validity of any other covenant or provision of this agreement. [ 7 ] The dispute between the parties arises from the characterization of the RAA referred to in Clause 9 of the employment contract. [ 8 ] Some background on the nature of the RAA is helpful.

Trican carries or carried on business in a number of different countries where some might characterize working conditions as less favourable to an employee from Canada than one might experience working in Canada. Evidence was provided as to the countries involved, and the various allowances given. The RAA was paid as a percentage premium over and above the base salary of an employee. Work in different countries had different applicable premium payments. The premium paid for working in Saudi Arabia was 25%.

The Employment Standards Code Requirements and the Effects of Non-Compliance [ 9 ] Characterization of the nature of the RAA is important because the plaintiff argues that the RAA is a part of “wages” as that term is defined in the Employment Standards Code . Severance payments under the Employment Standards Code must be calculated based upon “wages” (see

section 57 of the Code ). The defendant argues that the RAA does not fall within the definition of wages. [ 10 ] The employment contract excludes the RAA in the calculation of the payment in lieu of notice amount upon severance. As a result, the plaintiff argues that the employment contract by its terms purports to contract out of the provisions of the Employment Standards Code , and that it is therefore void and unenforceable, making the common law applicable for matters pertaining to Trican’s severance obligations toward Mr. Pisko.

Trican argues that the RAA is not wages, and therefore there is nothing objectionable about the employment contract.

It further argues that even if the RAA is wages, it paid more than it was obliged to pay under the contract because it did include the RAA in the severance payment that it made in any event, and that therefore any objectionable part about the employment contract as written has been cured. [ 11 ] Wages are defined in the Employment Standards Code as: “wages” includes salary, pay, money paid for time off instead of overtime pay, commission or remuneration for work, however calculated, but does not include overtime pay, vacation pay, general holiday pay and termination pay, a payment made as a gift or bonus that is dependent on the discretion of an employer and that is not related to hours of work, production or efficiency, (iii) expenses or an allowance provided instead of expenses, or (iv) tips or other gratuities; [ 12 ]

Section 56 of the Employment Standards Code deals with the minimum severance obligations of an employer toward employees. It provides: 56 To terminate employment an employer must give an employee written termination notice of at least ... (f) 8 weeks, if the employee has been employed by the employer for 10 years or more. [ 13 ] Mr. Pisko was employed with Trican for more than ten years. Accordingly, under the Employment Standards Code , Mr. Pisko was entitled, at a minimum, to at least eight weeks of either notice, payment in lieu of notice, or a combination thereof.

Section 57 of the Employment Standards Code permits any combination of those things.

[14] A “week” is defined in the Employment Standards Code as a seven-day period. Accordingly, the 60 day provision in thetermination clause in the employment contract exceeded the minimum number of days of notice required by

section 56 of theEmployment Standards Code (56 days). That does not, however, deal with the issue of whether “wages” are properly calculated in theemployment contract for the purpose of meeting severance obligations, or whether that issue indirectly affects the notice period issue byway of its effect on the calculation of the severance payment amount. [15] The plaintiff relies heavily upon the decision in Machtinger v. HOJ Industries Ltd., (SCC), [1992] 1 SCR986. In Machtinger, the employer attempted to contract out of the provisions of the legislative equivalent to the Employment StandardsCode in Ontario.

In one employee’s case, the employer purported to require no notice for termination, and in another employee’s case, itprovided for a notice period of two weeks. The Supreme Court of Canada held that both contracts were void. [16] At paragraphs 33 and 34 the Court held: If the only sanction which employers potentially face for failure to comply with the minimum notice periods prescribed by the Act is anorder that they minimally comply with the Act, employers will have little incentive to make contracts with their employees that complywith the Act.

As Swinton and Etherington suggest, most individual employees are unaware of their legal rights, or unwilling or unable togo to the trouble and expense of having them vindicated. Employers can rely on the fact that many employees will not challengecontractual notice provisions which are in fact contrary to employment standards legislation.

Employers such as the present respondentcan contract with their employees for notice periods below the statutory minimum, knowing that only those individual employees whotake legal action after they are dismissed will in fact receive the protection of the minimum statutory notice provisions. In my view, an approach more consistent with the objects of the Act is that, if an employment contract fails to comply with the minimumstatutory notice provisions of the Act, then the presumption of reasonable notice will not have been rebutted.

Employers will have anincentive to comply with the Act to avoid the potentially longer notice periods required by the common law, and in consequence moreemployees are likely to receive the benefit of the minimum notice requirements. Such an approach is also more consistent with thelegislative intention expressed by s. 6 of the Act, which expressly preserves the civil remedies otherwise available to an employee againsthis or her employer. [17] The clause in question in Machtinger dealt with the notice period required for termination.

It purported to shorten the noticeperiod to a time period that was less than that required under the applicable employment standards legislation. [18] As was the case in Machtinger,

Section 4 of the Employment Standards Code provides for relief in relation to attempts tocontract out of the minimum protections offered by the legislation. It provides: 4 An agreement that this Act or a provision of it does not apply, or that the remedies provided by it are not to be available for anemployee, is against public policy and void. [19] In the present case, there are no issues with respect to the notice period provision itself, and there is no attempt to contract outof the prescribed minimum notice periods under the Employment Standards Code.

The Employment Standards Code calls for a noticeperiod of at least 56 days on these facts. The 60 days that is provided for in the employment contract is more than the required minimum. [20] While the contract in issue in this case does not expressly purport to shorten the notice period as in Machtinger, the questionis whether it does so indirectly in a way that violates the principles in Machtinger.

Is the RAA “wages”? [21] The purported illegality in this case is not in the length of the notice that is provided for in the notice provision, but in theformula for calculation of the amount required for payment in lieu of notice. The issue is whether the RAA can properly be excludedfrom the calculation in determining the payment in lieu of notice amount. If it cannot be excluded, the clause may be problematical. If itcan be excluded, the clause on its face meets the Employment Standard Code minimums.

Accordingly, I must consider whether theRAA can be characterized as “wages”. [22] I have no difficulty in concluding that the RAA falls within the definition of “wages” as that term is defined in theEmployment Standards Code. It is a specific premium that is paid over and above the regular pay of the employee, and it is earnedexactly as base salary is earned in a fashion that is directly proportional to the earning of base salary. The relationship between the two islinear. The simple fact is that employees of Trican such as Mr.

Pisko were paid more for work in Saudi Arabia (and other countries) thanthey were paid for similar work in Canada. The RAA is a method to induce employees to work in other countries. The amount paid is theamount of money that it presumably takes to engage an employee in the applicable foreign country. The combination of the base salaryand the RAA is clearly the wage that Mr. Pisko earned while working in Saudi Arabia. [23] Trican argued strenuously that the RAA should be equated to a “living allowance” and it cited cases which it said were to thateffect.

The cases were not generally supportive of that argument because they are easily distinguishable. In this case, the employee’sbasic living expenses are paid by Trican while the employee is in the foreign country. There is no need for a living allowance to coverthose costs. In the living allowance cases, the employee is paid an allowance to offset things such as higher costs for housing and foodand the like. Generally, the employee pays the expense in the living allowance cases. For that reason, there is no reimbursementcomponent to the RAA payment as was argued by Trican.

The money paid is simply money for the work that an employee does forTrican. The more work that an employee does, the more RAA that is paid to the employee. [24] Furthermore, the income from the RAA is treated as T4 income for tax purposes. While that may not be determinative initself, it is a strong indicator as to the character of the payments. Presumably Trican would not intend to expose its employees to taxationon the RAA unless it were necessary to do so.

I find that no reasonable argument can be made that the RAA is anything other thanwages, and to the extent that the employment agreement purports to exclude the RAA from the calculation of any severance obligations,the employment agreement is void in that respect as a result of

section 4 of the Employment Standards Code.

Severability [ 25 ] The question then becomes whether all of Clause 14 of the employment contract (including the 60 day notice provision) is void, or whether some type of alternative result should flow. The plaintiff argues that all of Clause 14 is void and that Machtinger applies preserving the common law position on notice periods and reasonable notice. [ 26 ] The employment agreement in this case has a severability clause. The agreements in Machtinger did not appear to have had such a clause. [ 27 ] When one reviews the termination clause in this case there are three alternatives for the employer.

The first alternative permits termination on 60 days notice. Nothing in that concept violates the Employment Standards Code in any way. The second alternative allows for a severance payment equivalent to 60 calendar days, but it excludes the RAA in the calculation of the payment. I have found that excluding the RAA from the calculation violates the Employment Standards Code . The third alternative, and the one chosen here, also excludes the RAA in the calculation of the payment in lieu of notice portion of the severance payment.

Similarly, that provision, as drafted, violates the Employment Standards Code . [ 28 ] Machtinger was a case about an aggressive employer who attempted to take advantage of employees and who then asked for a fallback position that its contract be interpreted as if it had been drafted with the employment standards minimum notice periods as its severance obligation.

The Supreme Court of Canada found that to be objectionable, as finding for the employer would have been an incentive for employers to attempt to take advantage of employees by attempting to shorten notice periods with no consequences to them if their attempts were not successful if they were allowed to have a fallback position based upon the employment standards minimum notice periods in any event. In Machtinger , there was a common law alternative on notice periods if the agreement was declared to be void.

The readily available common law alternative to a void contractual notice period was the common law doctrine of reasonable notice. [ 29 ] In this case, the issue is not with respect to the notice period itself, but rather in the calculation of wages. The working notice provision allowed for 60 days notice. There was no suggestion in the evidence or argument that anyone was attempting to intentionally avoid the provisions of the Employment Standards Code in the drafting of the payment in lieu of notice provisions. [ 30 ] The

preamble of the Employment Standards Code provides in part: RECOGNIZING that legislation is an appropriate means of establishing minimum standards for terms and conditions of employment ; (Emphasis added) [ 31 ] There is support for considering the

preamble of the Employment Standards Code in section 12(1) of the

Interpretation Act which provides:

(1) The

preamble of an enactment is a part of the enactment intended to assist in explaining the enactment. [ 32 ] The Employment Standards Code is meant to ensure that employees receive guaranteed minimum protections as set out in the Code . That is an important objective which must never be compromised. The Employment Standards Code is not, however, meant to necessarily serve as a conduit to remedies in excess of the minimum standards for every breach by an employer, regardless of the nature of the breach.

In some instances, such as in Machtinger , the result of a breach and a declaration that a provision in an employment contract is void results in reliance upon common law remedies where they exist and are available to deal with the issue that rendered the contract void. [ 33 ] In this case the offending provision is with respect to the calculation of wages. The remedy for that type of breach is to calculate the wages properly. The remedy is not to rewrite the agreement of the parties regarding the applicable notice period when that notice period complied with the Employment Standards Code .

I find that the issue of the notice period and the calculation of wages are two separate issues. While there may be some subtle differences between the calculation of income or wages for severance purposes under the Code and under the common law, there is no suggestion that any of that type of income is a factor in this case. [ 34 ] Trican argued that the severability clause was available to provide formal severance of the offending portions of Clause 14 of the letter agreement.

I do not believe that it is necessary to formally do so based upon the facts of this case. [ 35 ] The Employment Standards Code provides for a minimum set of standards that must be met by an employer. The employment agreement permitted termination with notice. The notice that was given in this case was 16 days of working notice, plus a severance payment of 60 days including the RAA. The notice given and the payment made clearly exceeded the guaranteed minimums under the Employment Standards Code .

In the circumstances, I find that it is sufficient for the employer to simply have paid more than the correct amounts without the exclusion of the RAA as has been done by the employer. Conclusion [ 36 ] In accordance with Hryniak v. Mauldin , 2014 SCC 7 , I find that the record before me is sufficiently complete to allow me to make a fair and just disposition on the merits, and that there are no material facts in dispute. Accordingly, I grant Trican’s application for

summary dismissal. It has more than met its obligations under the employment agreement, as affected by the Employment Standards Code , and it has exceeded the minimum standards required under the Employment Standards Code when wages are properly calculated. There is an enforceable notice period provision in the employment contract. Trican has paid 60 days of payment in lieu of notice (including the RAA) when it was obliged to pay 44 days (including the RAA) having given 16 days of working notice. There are no further issues that remain. [ 37 ] If they parties cannot agree on costs they may be spoken to by appointment.

Heard on the 8 th day of August, 2016. Dated at the City of Calgary, Alberta this 6 th day of September, 2016. J. Farrington M.C.C.Q.B.A. Appearances: Chapman Riebeek LLP Tyler Nightingale for the Plaintiff Osler, Hoskin & Harcourt LLP Shaun Parker and Catherine Hamill for the Defendant