We’ve written a few blogs over the last few months about employment law, specifically around wrongful dismissal or the failure of an employer to provide an employee with payment in lieu of notice when being terminated.

A recent decision from the Provincial Court of Alberta has allowed us to discuss a situation that rarely comes up, which is whether someone can accept goods in lieu of payment when being terminated without cause. The layperson might not know what kinds of legal implications taking goods from an employer may carry.

In this article, we look at a former truck driver and fabricator who accepted tools from his former employer, with the employer taking the position that the tools served as payment. 

Employer lets team know it is going out of business

The employee began working for the employer in June 2010, with his last day of work being November 22, 2018. He started his employment as a truck driver and later worked as a fabricator. The employer operated a hauling business, and the Director and his son ran it. 

The business had slowed down in the fall of 2018, and during a meeting towards the end of October, it was announced they were planning to shut down operations. The employee was told that the company’s equipment would still have to be cleaned and prepared for auction and that he should only expect to be kept on as an employee for another month or so. The employee said he spoke with the Director, who told him he would be taken care of. 

The employee was not given severance pay, but when he was moving his personal property from the shop, the Director approached him and gave him a welder, a set of torches, and two welding curtains (the employer said he was given additional equipment). The employee told the court he asked if the tools were being given to him as severance and were told, “That’s all I have to offer. There is no severance. I’m just giving this to you.”

The value of the tools given to the employee was disputed. The employer told the court the employee was given tools valued at between $60,000-$70,000 as well as about $15,000 worth of steel. Another former employer-backed up that estimate and said the employer and the employee had shaken hands before walking away from one another.

The employee did not provide a value of the tools given to him but did take the opinion that they were not worth what he was owed as severance.

Was the employee entitled to severance?

The court found that the Canada Labour Code makes it clear the employee was entitled to severance pay, having worked for the employer for several years. If the court were to refer to the Labour Code, the employee would have been entitled to $10,861, including wages and vacation pay. 

The court noted that since there was no money provided as severance, it then asked whether the employee was paid in a form other than money and if that payment satisfied the employer’s obligations. The court found that the employee’s testimony that he was not happy to have received the tools was contrary to what most people would have felt in that situation since most people are usually happy to receive things of value. The court placed considerable weight on the employer’s testimony that a considerable number of tools were provided since it was backed up by another former employee who witnessed what was described as an entire wall of tools being taken away by the employee. The court was ultimately satisfied that even if the employee does not feel he received the tools in lieu of payment, they were worth more than whatever he would have received in monetary payment.

Did the employer and employee have an agreement that the tools would be provided instead of payment?

The court wrote that while there are entitlements under the Canada Labour Code, parties can contract into other arrangements so long as the benefit conferred upon the employee is greater than they would have received through legislation. These agreements, like most, are better made in writing, but oral agreements can be made as well. 

After examining the evidence, the court concluded there was a basis to find an arrangement or agreement, even if it was only oral. The court relied on the exchange between the parties where the employee asked if the tools were being provided as severance, with the employer replying, “That’s all I have to offer. There is no severance. I’m just giving this to you.” Even if a dispute over the value of the tools, or even the number of tools, came up later, this was enough to establish that an agreement existed, even if it lacked any legal language. While the employee said he did not want to receive the tools in lieu of payment, his acceptance of them seemed to say otherwise, meaning that he should have left them behind if he did not intend for them to count as payment.

The court wrote that sine there was an oral agreement in place between the parties, and the value of the tools was greater than what he would have received for severance, the employer had met its legal obligation.

Calgary Employment Lawyers Helping Clients with Employment Law Issues, Including Termination

The employment law team at HMC Lawyers often advises both employees and employers about their rights and responsibilities on several topics related to employment law. We have worked on files including human rights complaints, wrongful dismissal, and additional issues in employment law. Our experience on both sides of employment law matters allows us to provide our clients with valuable and comprehensive insight and advice. Please call us at 1-800-480-3534 or reach out to us online to find out how we can help you today.