B.C. Court Enforces Employee Handbook Notice Provision

In Arasteh v. Best Buy Canada Ltd., the British Columbia Supreme Court confirmed that a termination clause contained in an employee handbook which limits the amount of notice of termination owing to an employee was enforceable.

Mr. Arasteh worked for Best Buy for six years before he was terminated for poor performance. The trial judge of the British Columbia Provincial Court found that Best Buy had not established just cause for his termination, and that Mr. Arasteh was therefore entitled to damages for wrongful dismissal. The judge concluded that the damages owed to Mr. Arasteh should be calculated in accordance with an Associate Handbook that Mr. Arasteh had signed when he began work. The clause in the handbook limited his entitlement upon termination without cause to the minimum notice established under the provincial employment standards legislation.

Mr. Arasteh appealed the decision to the British Columbia Supreme Court. He argued that the handbook did not form part of his employment contract, and as such, could not replace his common law right to reasonable notice of termination. He further argued that the employer was precluded from relying upon this clause given that it had terminated Mr. Arasteh for cause.

The Court dismissed Mr. Arasteh’s appeal. The Court found that the handbook could properly be incorporated as part of that contract because it did not contradict any of its terms.

More significantly, the Court went on to conclude that where an employer fails to establish that it had just cause to terminate the employee, it will not be precluded from relying upon the termination clause which limits the notice period.

This case illustrates the importance of ensuring that employment contracts contain a termination provision that limits the notice period to the minimum standards set by the Employment Standards Act, 2000. While ideally this provision would be included in the contract itself, it can also be set out in an employee policy or handbook – as long as it does not contradict any provisions in the contract. Expressly limiting the amount of notice owed to an employee on termination can significantly reduce your liability for damages in case of a wrongful dismissal claim.