Topic: Macaraeg Decision

Column: “Employment Issues” – Legal Matters Issue 923

Written by: Robert Yeager

In December of 2006, the British Columbia Supreme Court issued a decision now known simply as Macaraeg that, if it is allowed to stand, will have a sea-change effect on basic employee rights in British Columbia. The Macaraeg decision is currently under appeal. If Macaraeg survives the appeal process intact, it will change the lay of the land.
Up until the Macaraeg decision, there were two separate regimes in terms of enforcement of employee rights. There was the regime of statute law, and the regime of common law. The regimes are really two sides of the same coin, the coin being employee rights. But a 1988 decision known as Sitka has historically kept the regimes each on their own side of that coin.

Statute Law vs Common Law

The statute law regime allowed the employee certain minimum standards or rights described and set out under a statute known as the Employment Standards Act. The Employment Standards Tribunal is a branch of government set up as the arena in which Act breaches were dealt with. Because of Sitka, if an employee wished to pursue such basic statute rights as those found in the Act, the Tribunal was the exclusive forum for the hearing of such disputes.

On the other side of the coin, there was the common law regime. Employment contracts are ultimately governed by common law. While the Act sets minimums, the common law sets maximums. A wrongful dismissal would typically become a common law claim seeking the maximums within the common law court system in what is colloquially known as a lawsuit. The protocol for wrongful dismissal lawsuits, based on Sitka, was that in claiming maximum entitlements, the minimums of the Act would be included without having to actually mention the Act. When a wrongful dismissal claimant attempted to claim things in the lawsuit that were seen as being reserved to the exclusive jurisdiction of the Tribunal, the Sitka case kept the Act out of common law wrongful dismissal lawsuits for the most part, maintaining two sides to the coin.

Wrongful dismissal claims were made in the courts. Claims under the specific provisions of the Act were made in the Tribunal. The claimant who had both forms of claim would generally have to bring two different claims for the two different forms of relief.

Until Macaraeg.

Statutory Overtime and Wrongful Dismissal

Macaraeg was a claim for statutory overtime pay made within a common law wrongful dismissal action in court. Under the rule in Sitka, such a claim for statutory overtime had to be made to the Tribunal, following the Act. The Act sets a six month limit on the time period in which statutory overtime claims can be assessed by the Tribunal. The employer was so confident that Sitka would do what it had always done in the past and prevent the statutory overtime claim from being heard in court, it applied to court for such a ruling. It lost.

The court in Macaraeg, and a 2007 decision which follows Macaraeg called Nielson, made it such that minimum rights set out in the Act are presumed to form part of each employment contract, even where the employment contract is silent on the right. Since overtime is described in the Act as being such a minimum right, where the actual contract of employment is silent as to overtime, the Macaraeg decision says that the employee’s right is at least the right set out in the Act, which means the employee has the right to be paid overtime as described in the Act. Further, the courts will not limit statutory rights claimed via the courts to the six month limitation described under the Act.

Macaraeg Decision Impacts Wrongful Termination Claims

What the Macaraeg and Nielson decisions mean in their simplest analysis is that overtime claims are now claims that can properly be brought in court as part of a wrongful dismissal action, and such overtime claims will not necessarily be limited by any six month time period. On proper facts, they can go back for years. This will come as a large and unpleasant surprise to employers.

In its broader implications, Macaraeg seems to allow any right stipulated by the Act to be pursued as a breach of contract or wrongful dismissal action in the courts. This adds gravy to many wrongful dismissal claims. Also with Macaraeg and Nielson, a new right of class action may have arisen based on rights contained in the Act. The most explosive sort of class action claim for rights under the Act would be an overtime claim of an extended period of time shared by a large class of employees against a large employer.

Appeal might change all this. Subject to appeal, under Macaraeg and Nielson, the common law and courts seem to have swallowed whole the Act and the Tribunal. So much for two sides of the same coin.