Wayne Gretzky and the Proper Use of Written Employment Agreements

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Article2023 | 10 | 05

Wayne Gretzky and the Proper Use of Written Employment Agreements

Jeff Palamar's article for CPHR Manitoba’s bi-annual magazine, HRmatters

Skates of two hockey players facing off at puck drop

Most hockey fans have heard the quote attributed to the Great One, Wayne Gretzky, that you should skate to where the puck is going to be and not where it has been. I read recently that Wayne’s famous father Walter first said it but either way the idea has a lot of merit, and things worked out just fine for Wayne.

With a slight twist this also applies in the context of employment law, and risk management in the workplace for HR professionals. While we need to get to where the puck is going to be, we should never lose sight of where the puck has been as that can be an excellent predictor of where we need to go.

My day-to-day work involves responding to problems but also trying to avoid them moving forward. One reason to have a written employment agreement is to try and remove uncertainty and so define the future as much as you can. If done correctly, this allows you not just to hope and guess about where the puck is going to be but instead know that with some certainty.

Precedents for written employment agreements can be found anywhere. Good precedents are hard to find. Even good ones have “best before” dates because the law changes and so what was useful in the past may have limited or no value at present.

Written employment agreements are special in the sense that courts look at them differently, and apply different rules of interpretation than are used when reviewing other commercial agreements.

When drafting or reading a written employment agreement, always remember:

  1. Employment is indefinite unless there is unequivocal and explicit language establishing a fixed term;
  2. An interpretation providing a long-term and loyal employee with reasonable notice is always preferred over one which limits notice;
  3. Uncertainty is resolved in favour of the employee;
  4. Absent clear and enforceable language to the contrary, and without cause;
  • an employer must provide common law “reasonable notice” or pay in lieu to terminate employment with no pre-fixed end date; and
  • an employer must pay out the balance of the term when terminating employment with a pre-fixed end date;
  1. Referring to statutory minimums does not necessarily displace the presumption of common law reasonable notice;
  2. You cannot contract out of (agree to provide less than) statutory minimums;
  3. Something potentially less than statutory minimums likely will be invalid even if on the facts as they exist, statutory minimums are respected;
  4. Even if the clauses relied on are consistent with statutory minimums, if some other provision is not, that can poison things and render the entire agreement null and void (an employee unfamiliar with their rights might incorrectly believe the illegal clause was binding, and an employer could benefit from that mistake);
  5. If the agreement provides a notice period shorter than a statutory minimum, that is not an invitation to impose as short a notice period as possible, but rather, the agreement is null and void; and
  6. A “saving” clause likely won’t make enforceable what is otherwise illegal, because employers should draft agreements which comply with legislation and not rely on courts to correct their work.

In the last decade or so in particular there have been countless court decisions overturning written employment agreements. Creative legal counsel and/or judges go through what (to some) may seem to be gold medal worthy routines of mental gymnastics to scrutinize these agreements through an employee-friendly interpretive lens, strike them down, and award significant damages.

As an example, the Alberta Court of Appeal issued a decision on June 15, 2022 in Bryant v Parkland School Division. There, the Court interpreted a termination clause which said:

This contract may be terminated by the Employee by giving to the Board thirty (30) days or more prior written notice, and by the Board upon giving the Employee sixty (60) days or more written notice. [emphasis added]

The court found this clause did not unambiguously limit the assumed right to common law reasonable notice. The clause did not fix the notice entitlement or impose an upper limit on the amount of notice. The words “or more” expressly recognized a longer notice period as a realistic possibility.

The court did not accept the clause simply gave the employer unfettered discretion to decide how much beyond 60 days could be provided, such as it might offer for long service employees. If that had been intended the employer should have clearly written that.

The clause was not sufficiently clear, unequivocal and unambiguous to remove or limit the presumed common law right to reasonable notice. Rather, the clause meant the employee was entitled to common law reasonable notice as determined by the court, subject to a minimum of 60 days.

What then is an employer to do?

As a starting point, it must appreciate where the puck has been and the highly pro-employee environment in which we find ourselves. There is no reason to expect anything different moving forward and so following the puck to the future, most likely an employer will see whatever it has created in terms of a written employment agreement prodded, shredded and placed under a microscope. If any of what remains is inappropriate, the agreement will be invalid.

In this context, it doesn’t make sense to cut corners. Existing written employment agreements need to be updated, and new ones need to be drafted appropriately. To do otherwise is like committing to pay for a new house today based on next week’s expected lottery winnings. It’s possible things are going to work out OK, but the odds are deeply against it.

 


DISCLAIMER: This article is presented for informational purposes only. The views expressed are solely the author(s)’ and should not be attributed to any other party, including Taylor McCaffrey LLP. While care is taken to ensure accuracy, before relying upon the information in this article you should seek and be guided by legal advice based on your specific circumstances. The information in this article does not constitute legal advice or solicitation and does not create a solicitor-client relationship. Any unsolicited information sent to the author(s) cannot be considered to be solicitor-client privileged.

If you would like legal advice, kindly contact the author(s) directly or the firm's Chief Operating Officer at pknapp@tmlawyers.com, or 204.988.0356.



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Jeff Palamar
Jeff Palamar
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