Notice of termination vs severance

One of the challenges of teaching students about interpreting collective agreements is the effect of clauses is often very hard to know because they can interact with other clauses in the collective agreement as well as other regimes of employment law. As part of a research project, I came across a 2011 decision that is a fun read about termination notice and severance pay.

The decision is:

Canadian Energy Workers Association v ATCO I-Tek Business Services Ltd, 2011 CanLII 81659 (AB GAA)

You can find the decision on canlii.org by searching the CanLII number (81659). CanLii is an excellent repository of Canadian law.

The basic facts are these:

• The employer was outsourcing a significant number of positions and this resulted in significant number of terminations.
• The collective agreement gave the affected workers rights to (1) working notice (or pay in lieu of notice) under Article 30 and (2) severance under Article 32 and a Letter of Agreement.
• The union argued that the permanent workers were entitled to benefit from both sets of rights; the employer argued that workers were only entitled to severance.
• (There was a second issue around a worker signing a release that isn’t really all that interesting.)

The union’s argument was (loosely, I’m paraphrasing in the interest of space) notice is designed to give workers a chance to find alternative employment while severance is compensation for their investment in their workplace that is lost upon termination. Essentially, these two are complementary, rather than alternative, entitlements.

The employer’s argument (again, loosely) was that the entitlements are mutually exclusive and applicable in different circumstances and this the benefits do not compound. Reading the provisions as complementary creates an excessive benefit for the workers.

I won’t spoil the ending for you. The panel’s decision flows from an interesting exploration of the purpose of each of the rights in the contract, the language used, and the effect they have for different employee groups. This decision is a relatively simple example of this kind of inquiry, that occurs in many contract interpretation grievances.

The ultimate decision (that I found to be surprising) highlights how parties can negotiate provisions that each finds acceptable without mutually working through the actual operation of those provisions. This can reflect the nature of bargaining (where ambiguous language may be a strategy to, for example, defer a fight), the complexity of language (which can give rise to legitimately different interpretations), and the impact of practical constraints (e.g., bargaining is often done under the gun by very tired people who sometimes make errors of omission).

-- Bob Barnetson