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Tools and Materials Instead of Cash for Severance?
Hubbard v 651398 British Columbia Ltd., 2022 ABPC 22 (Sihra), is a new Alberta Provincial Court case where an employer shut down its operations and provided an employee with a bunch of valuable tools and materials, but no cash severance. The employee sued, arguing that the tools were a gift and he was entitled to cash severance.
In this strange set of facts, the Honourable Judge J. K. Sihra found that the employee was not entitled to a cash severance. The Judge found that the employee and employer had a verbal agreement that the employee was taking the valuable tools and materials as his severance, and that this was allowed instead of cash severance.
These are the pertinent facts in this case:
- The plaintiff employee was employed by the employer – Ritchie Bros. – from 2010 to 2018, initially as a truck driver and later as a fabricator
- The employee had many of his own valuable tools at the shop
- The employer had many valuable tools and valuable materials such as steel for fabrication
- In 2018, the employer announced that it was no longer going to be doing hauling work as Ritchie Bros. and they sold off their major assets like trucks and trailers at auction. Employees like the plaintiff were told their jobs would end in a month or so
- The employer gave tools and materials to the employee, including a welder and a bunch of steel, with a value of about $30,000
- The employee asked “Is this severance?” and the employer answered “That’s all I have to offer. There is no severance. I’m just giving this to you.”
- The employee was not paid cash severance
- The employee argued that the tools and materials were a gift, and that he was entitled to cash statutory severance, plus reasonable notice at common law
Analysis / Conclusion
The court considered the argument of the employee that the tools and materials the employer had provided him at the end of his employment were a gift. The Court rejected this argument as follows:
 Upon a review of the evidence, the Court concludes that there is indeed a basis to find an arrangement or agreement, which was oral, between the Plaintiff and the Defendant corporation. This conclusion arises from the Plaintiff’s own evidence as to his question to Mr. Laferriere in regard to the property provided to him, “Is this severance?”, and Mr. Laferriere’s answer, “That’s all I have to offer. There is no severance. I’m just giving this to you.” Clearly, the parties were speaking in everyday parlance and can be forgiven for not expressing themselves in legal terms. One possible interpretation of the noted exchange is that although no severance monies were available, all that could be offered instead were goods. The Plaintiff’s evidence was that he did not protest about this arrangement and he did accept the goods, which could clearly be construed as being reflective of the parties being ad idem. [underline added]
 On the evidence, and based on their presentation in the witness box, the Court concludes that the Plaintiff and Mr. Laferriere were on par in terms of business acumen and sophistication. Neither was under the sway of the other.
 As the benefit conferred upon the Plaintiff was greater than his mandatory minimum severance pay entitlement under the Canada Labour Code, there would be no basis for this Court not to uphold the parties’ agreement. Furthermore, the Plaintiff should be estopped from seeking additional payment now. Although estoppel cannot defeat a statutory right, as the Plaintiff received a greater benefit, that right has been fulfilled and estoppel would apply.
This case is really interesting to me, but a bit concerning as well. It is interesting because the employer here effectively provided goods in trade to the employee instead of cash severance. This is a highly unusual arrangement.
This case is concerning to me, however, because I see the potential for it to be misused. Some employers engage in sneaky tactics from time to time, and I have seen employers attempt to trick employees into accepting improvident severance packages. I suspect some such employers will try to use this case to trick employees into “accepting” tools and/or materials as severance packages without the employee being aware they are doing so, and without the employee getting legal advice first.
Bow River Law
Bow River Law is an employment, human rights and labour law firm. Our lawyers are knowledgeable, skilled and experienced in Alberta employment law. Bow River Law is based in Calgary, but we serve all of Alberta.
If you are an employee who has recently been fired, do not agree to take anything from your employer until after you speak to an employer lawyer. Let Bow River Law help you secure a good severance package.
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