The British Columbia Court of Appeal has overturned a ruling that gave a copper mine employee an 18-month severance package upon retirement.
At trial last year, the B.C. Supreme Court had awarded Albert Aubrey, an employee at mining company Teck Highland Valley Copper Partnership in Logan Lake, B.C., $176,250 in damages for a breach of an employment contract. Aubrey believed that, upon his retirement, he’d receive a payment based on one month’s pay for every year of service to a maximum of 18 months.
After working for nearly 10 years for a predecessor company, Aubrey moved to a supervisory role from a unionized one at Teck Highland Valley. Based on a discussion about the benefits associated with the position in 1992 with Gordon Matthews, a representative from the human resources department, Aubrey understood he’d receive a package on retirement. However, when he retired in July 2012, the company refused to give him the package.
In his testimony, Aubrey was quite honest and admitted no one told him he’d get the payment on retirement, although the package was common knowledge among employees, says Elizabeth Harris, a commercial litigation lawyer at Morelli Chertkow LLP who represented the plaintiff. “So we argued that was ambiguous because I believe he meant it was never tied to him retiring. He was just told he was going to get it, and the context took place in what was going to be paid to him when he retired,” says Harris.
“And then, subsequently, we argued as well that it was reasonable for Mr. Aubrey to believe that when he heard this one month per year of pay as severance, to link it to retirement because he knew, through just general talk . . . that people that were retiring from staff, up until the time he started this position, were getting this package,” she adds.
“Subsequent to 1992, right up until the day that Jerry Aubrey retired, all staff members were getting it as well. Mr. Aubrey was the very first person who didn’t get it.”
At trial, B.C. Supreme Court Justice Joel Groves found Aubrey — as well as another plaintiff, Martin Jylha — had both proven they were promised the package when they took their positions and the term constituted a part of their contracts with the company.
In its appeal, however, the employer argued the judge erred in making a finding for which there was no evidence. Of particular note was the distinction in regards to severance offered to employees during times the company was looking to reduce its workforce.
“Mr. Matthews explained that 1993, the year Mr. Aubrey was hired as staff, was one of the times when HVC wished to reduce the number of employees because there were ‘tough times in the mining world,'” the company said in summarizing Matthews’ evidence.
“At that time, a ‘formal package’ was offered to existing employees who were interested in leaving the company. Mr. Matthews testified that separation packages were also sometimes granted on an individual basis where there was an opportunity to reduce the number of employees in a department and it was advantageous for HVC to do so. According to Mr. Matthews, the general manager had to approve such packages.”
Earlier this month, the B.C. Court of Appeal ruled in the company’s favour and overturned Groves’ decision. “I agree with HVC that, at most, the evidence supports a promise of a severance payment payable on termination,” wrote appeal court Justice Anne MacKenzie. In her ruling, MacKenzie referred to definitions of severance as money paid to a dismissed employee.
“Because Mr. Aubrey voluntarily retired rather than involuntarily left, the payment of the package was never triggered,” she wrote. “In my opinion, to establish the words ‘severance’ or ‘separation’ meant leaving voluntarily on retirement (rather than involuntarily on termination), such evidence was required.”
The lesson to employers, according to Harris, is to be careful with oral contracts. “Historical, oral contracts are, I think, going to be more difficult to uphold, regardless of what side you’re on, because you cannot rely on what the company has been doing over time and it’s up to the parties to convince the court what was said 20, 30 years ago,” she says. “Oral contracts have been more easily accepted by the courts, until now.”
Both Aubrey and Jylha received damages at trial, but the company didn’t appeal the award to Jylha. “[Highland Valley Copper] did not appeal the decision in Jylha,” says Harris. “They believed there were sufficient grounds to form a contract. But they did appeal Aubrey, saying that the words used by Mr. Aubrey and the HR manager when they had their meeting in 1992 were not sufficiently clear to form the basis of an oral contract. With Jlyha . . . the evidence was more clear.”
Teck Highland Valley Copper Partnership declined to comment on the ruling.