Employer Unable to Rely on Company Policy Not Incorporated into Employment Agreement

To what extent can employers rely on internal policies, not incorporated into an employment agreement, for determining employee rights and benefits? According to one decision from the British Columbia Supreme Court, very little.

Facts

2013 BCSC 102 (CanLII) was a wrongful dismissal case. As part of his claim for damages, the dismissed employee claimed that he was entitled to a car allowance for the duration of his reasonable notice period as a car allowance was a benefit to which he was entitled during employment.

For its part, the employer argued that the employee was not entitled to a car allowance after termination pursuant to company policy.

Decision

Little analysis was given as to why the plaintiff employee was entitled to the continued receipt of the car allowance. However, in dismissing the defendant’s argument that company policy precluded the receipt of such benefit following termination of employment, the Honourable Madam Justice Baker wrote the following:

[195] I do not accept the defendant’s submission that the defendant can rely on a term in an internal policy - not shown to have been incorporated by reference into [the employee's] contract of employment - to deny him compensation for the car allowance he would have received had he been given working notice.

In the result the plaintiff was award his car allowance for the reasonable notice period found by the court.

Commentary

That employees are entitled to receive their benefits of employment during the reasonable notice period is an issue that has been frequently considered by this blog. For those looking for similar posts on this issue consider: The Requirement to Maintain Disability Benefits on Dismissal or The Benefit of Benefits.

However, an issue not previously considered by this blog is that of internal company policies. I will frequently be advised by clients as to what a company’s policy is with respect to termination pay. A client may say, “my company provides two weeks of severance for every year of service” or something similar, followed by the questions of (a) whether the policy is fair, and (b) whether the policy is legal. The answer to that question is complicated, but what the case cited above appears to say is that unless explicit reference is made to those policies in the employee’s employment agreement (which frequently is not the case) the employer may not be able to rely on those policies when they need them.

Indeed this blog previously looked at the case of Shakur v. Mitchell Plastics, 2012 ONSC 1008 (CanLII), in the post No finding of just cause notwithstanding workplace assault. In that case, the Ontario Superior Court of Justice refused to uphold the terms of a workplace violence policy against an employee where the employer failed to demonstrate that it had explained to its employees the meaning of the policy and the consequences of failing to follow it.

Takeaways for Employees

The takeaway for employees is that simply because there is a policy does not necessarily mean that the policy determines your rights and obligations. Now, readers of this blog are equally cautioned that simply because in some cases the courts have declined to enforce policies against employees that does not mean that you can refuse to follow a company policy without consequences. What is means is that if you have questions or concerns about company policies, it may make sense to speak to a lawyer; especially if that policy purports to limit your entitlements following termination.

If you have been terminated from your employment, or even if you have not, the professional, experienced and cost-effective employment lawyers for employees at Ottawa's Kelly Santini LLP would be happy to be of service to you.

To reach the author of this blog, Sean Bawden, email sbawden@kellysantini.com or call 613.238.6321 x260.

Takeaways for Employers

The takeaway for employers is that even though you may have a policy, unless you can demonstrate that you made your employees aware of it, you may not be able to rely upon it when you need it the most. Therefore, while it is always advisable to have your employment agreements and policies prepared by a professional and experienced employment lawyer, it is equally important to ensure that those contracts, policies, and procedures are implemented in a way that ensures that they will ‘stick.’

If you are an employer and you are considering adding some new policies or procedures for your staff it may be prudent to seek professional legal advice. The professional, experienced and cost-effective employment lawyers for employers at Ottawa's Kelly Santini LLP would be happy to be of service to your business or organization.

To reach the author of this blog, Sean Bawden, email sbawden@kellysantini.com or call 613.238.6321 x260.

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As always, everyone’s situation is different. The above is not intended to be legal advice for any particular situation and it is always prudent to seek professional legal advice before making any decisions with respect to one’s own case.

Sean Bawden, publisher of the law blog for the suddenly unemployed, can be reached by email at sbawden@kellysantini.com or by phone at 613.238.6321.

Sean P. Bawden is an Ottawa, Ontario employment lawyer and wrongful dismissal lawyer practicing with Kelly Santini LLP. He is also a part-time professor at Algonquin College teaching Trial Advocacy for Paralegals and Small Claims Court Practice.