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Wrongful Dismissal in Alberta: Is the limitation on severance clause enforceable?

Many employment contracts try to limit the severance payable under the contract to employment standards amounts. Is this language enforceable? The Alberta Court is Appeal looked at this issue in Holm v Agat Laboratories (2018 ABCA23).

The Court in that case said the language had to be unambiguous. The clause in question said severance would be in accordance with the Employment Standards Code. Section 3 of the code allows common law actions, so the clause in question did not limit severance. The court went on to find that limitations on common law rights have to be clearly drafted. (The Supreme Court of Canada said something similar in Matthews v Ocean Nutrition).

In 2018, the Ontario Court of Appeal in Nemeth v Hatch came to the opposite conclusion- that language just had to have the intention to displace the common law. So there is an inconsistency in the law between the two provinces. It will be interesting to see how this is eventually resolve.

if you need advice drafting employment contracts, or need to see if your contract is enforceable, please feel free to contact us.

The information contained in this article is not legal advice. No solicitor client relationship is formed through this article. The reader is encouraged to retain counsel for advice in these matters.

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