A recent decision of the Nova Scotia Supreme Court, Book v. Tourism Nova Scotia, 2016 NSSC 253, deals with the severance payable to an employee terminated by a Crown agency which has been devolved from the Civil Service.
Mr. Book had been Nova Scotia civil servant for 27 years when the Province enacted the Tourism Nova Scotia Act, 2015, c.10, which created Tourism Nova Scotia, a private sector-lead organization responsible for promoting tourism in Nova Scotia. The Act creating Tourism Nova Scotia provided for the designation of certain civil servants for employment in the new Agency. Mr. Book became an employee of the new agency. His terms of employment were provided by a provision in the Act, which stated as follows:
“Every designated person is employed by the Corporation on the same of equal terms and conditions of employment as those under which the employee was employed as an employee of Her Majesty in right of the Province until changed by collective agreement or contract of employment.”
The terms and conditions under which Mr. Book had been employed with the Province were found in the Civil Service Act and Regulations made under that Act. These Regulations provided that a Deputy Minister who lays-off an employee was required to notify the employee in writing of the lay-off, the reasons for the lay-off and the effective date of the lay-off at least 8 weeks before the effective date. The Regulations also provided that an employee’s employment was deemed to be terminated on the effective date of the lay-off and that when an employee is deemed to terminated, the Provincial government was required to pay the employee a severance allowance. The maximum amount of severance allowance was 52 weeks of pay.
13 months after Mr. Book became an employee of Tourism Nova Scotia his employment was terminated. Mr. Book claimed that he should be compensated in damages for the absence of reasonable notice of termination of his employment and that the period of reasonable notice was considerably longer than 52 weeks.
Justice Chipman of the Nova Scotia Supreme Court found that the Civil Service Regulations, although no longer directly applicable to Mr. Book, were incorporated into his terms of employment with Tourism Nova Scotia and therefore he was only entitled to 52 weeks of pay as provided for under the Regulations .
Respectfully, in my opinion, this decision of Justice Chipman was wrongly decided. He failed to consider whether Mr. Book’s terms of employment as a civil servant upon termination without cause were limited to the 8 weeks’ notice and 52 weeks of pay as a severance allowance provided in the Civil Service Regulations.
In Wells v. Newfoundland [1999] 3 SCR 199, the Supreme Court of Canada decided that the terms and conditions of a public servant were contractual in nature and that while the terms and conditions of the contract may be dictated, in whole or in part, by statute, the employment relationship remains a contract in substance and the general law on contract will apply to that relationship.
This approach in Wells was applied by the Nova Scotia Court of Appeal to an employee in the Nova Scotia Civil Service in Smith v. Attorney General (N.S.), 2004 NSSC 106 and in Connolly v. Attorney General (N.S.), 2004 NSCA 107. In both of these cases the Court of Appeal did not limit its consideration of the terms of employment of these civil servants to the provisions of the Civil Service Act and Regulations. The Court of Appeal upheld an injunction which prevented the Deputy Minister involved from dismissing these individuals as authorized by the terms of the Civil Service Act because of a contractual relationship which limited the Deputy’s authority to dismiss.
If there was any doubt about the principle involved, that was put to rest when the Supreme Court of Canada applied the Wells decision in Dunsmuir v New Brunswick, [2008] 1 S.C.R 190. The Supreme Court accepted that the government’s common law relationship with its employees was governed by the general law of contract in the same way as private employment relationships.
The decisions in Wells, Smith, Connelly, and Dunsmuir require consideration of the terms and conditions of employment of a civil servant under the principles of contract law. While regulations may dictate some of the terms of a civil servant’s contract of employment, ordinary principles of contract law apply. The law implies a term that an employer may terminate the employment of an employee without cause on reasonable notice unless the implied term conflicts with the express terms including the terms dictated by statute.
In my view, this common law requirement is not negated by the provisions of the Civil Service Regulations which require the Province to give at least 8 weeks notice of lay-off and then pay a severance allowance of 4 weeks per year of service to a maximum of 52 weeks. The Regulations do not exclude the requirement of reasonable notice of termination. Reasonable notice of termination of a civil servant with 27 years of service would likely be somewhere in the vicinity of 24 months notice.
The decision in Book v. Tourism Nova Scotia was wrongly decided not because the Court applied the Tourism Act as continuing Mr. Book’s terms of employment as a civil servant but because his terms of employment as a civil servant were not only based on the Regulations under the Civil Service Act but also on his contract of employment into which a court should imply a term of reasonable notice of termination.