Cross-border companies need to be aware that even with an
American employment contract, Canadian law may apply in favour of
an employee. In Stanley v. Advertising Directory Solutions
Inc.,1 the employee had more than one employer: the
American parent and the Canadian subsidiary. Although the
employment contract with the American parent stipulated at-will
hiring (termination without notice), the court struck this out as
being void and held that Canadian law of reasonable notice applied,
because the employee was effectively working for the Canadian
subsidiary. Importantly, the court focused its analysis on the
"actual employment relationship" rather than a letter
setting out the terms of employment.
Canada does not allow "at-will" employment contracts.
There are minimum statutory requirements, and "at-will"
is below this minimum. Where an employer attempts to provide less
notice than the statutory minimum, the statutory minimum notice
period will not be imported into the employment
contract.2 Instead, the provision is void and the
employee becomes entitled to reasonable notice at common
law.3 At common law, reasonable notice of termination is
a presumption or implied term of the employment relationship, which
the parties can depart from only if the agreement meets or exceeds
the statutory minimum.4
THE STANLEY CASE
An American corporation ("Verizon") owned a
Vancouver-based company (Advertising Directory Solutions, formerly
"Dominion"). Ms. Stanley was initially employed by
Dominion, following which she had an "at-will" employment
contract with Verizon. Ms. Stanley returned to Dominion and worked
in Canada. When Dominion merged with an affiliate, Ms. Stanley was
terminated. She sued Dominion for damages for wrongful dismissal
and additional benefits claims. The trial judge dismissed Ms.
Stanley's claim for damages for wrongful dismissal on the basis
that her employer was Verizon. She appealed that decision. The
British Columbia Court of Appeal granted her appeal and held that
Dominion was Ms. Stanley's employer and that she is entitled to
damages for its failure to give reasonable notice of
The law may recognize that an employee has more than one
employer. In this case, the plaintiff was employed by both Verizon
and Dominion. The court held that Dominion was Ms. Stanley's
employer, defined by the Employment Standards Act s. 1(a) as
including a person "who has or had control or direction of an
employee". In that regard, Ms. Stanley reported to and was
evaluated by Dominion's president, who was her immediate
In assessing whether reasonable notice applied here, the court
looked at the "actual employment relationship" and held
that as an employee working in British Columbia, Canadian law
applied and Ms. Stanley was entitled to notice of termination. The
Court of Appeal determined that the trial judge had erred in
analyzing the notice issue by placing too much emphasis on a letter
setting out the terms of employment.
The court left the length of reasonable notice, and calculation
of damages to be determined by the trial judge.
PRACTICAL TIPS FOR EMPLOYERS
American law is significantly different from Canadian law with
regards to employees' rights upon termination South of the
border employers can terminate employees "at-will",
without notice. In Canada, there is a statutory minimum, and unless
there is a contractual limitation, the greater common law
reasonable notice will apply. If there is any possibility of
"co-employment", or that the identity of the employer
could be in dispute, employers are wise to clearly set out in the
employment agreement which entity employs the employee (i.e.
"who" the employer is).
1 2012 BCCA 350.
2 Macaraeg v. E Care Contact Centers Ltd., 2008 BCCA
3 Machtinger v. HOJ Industries Ltd.,  1 S.C.R.
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