Calculating reasonable notice for employee with multiple stints with company
Question: If we rehire a former employee, will that employee’s previous service with our company be considered continuous service for the purposes of calculating reasonable notice for dismissal? Does the length of time the employee has been away matter? What if the employee has had multiple stints with the company?
Answer: Where there have been breaks in an employee’s service, the treatment of those breaks for the purpose of determining the common law reasonable notice period will depend on the circumstances of the case. In Matheson v. Canadian Freightways Limited, the British Columbia Supreme Court stated:
“Depending on the circumstances an employer may be found to have explicitly recognized that an employee is to be treated as having maintained continuous employment regardless of an interruption in employment: Beach v. IKON Office Solutions Inc. In Chorny v. Freightliner of Canada Ltd. and Beach the courts looked at the circumstances and found that the employers had effectively treated the employees as long term employees.
“In Chorny the employer ignored the interruption for the purposes of calculating pensions and service recognition awards. In Beach the employer ignored the hiatus for purposes of entitlement to vacations and service pins. As well, the employer held out that the employee’s service ran from a time much earlier than the rehiring.
However, other cases have held that an employee’s term of employment is not continuous if the employee returns to the employer after terminating his previous employment and cutting all ties with the employer. The determination of whether the employment is continuous or not is one of fact.”
In deciding whether or not prior service should be recognized, a court will typically seek to determine the intentions of the parties. Generally speaking, where the employer has given the employee credit for prior service for the purpose of pension or vacation entitlement, bonus calculation, or some other service-based entitlement, the court is likely to find the prior service should also be included when calculating reasonable notice for that employee.
However, where the employer has not recognized prior service for any purpose, but has treated the employee upon her return in the same manner as a new employee, the notice period is likely to be based solely on the most recent period of service. It is also possible for the court to treat distinct periods of past service in a different manner, such that where an employee has been employed with the same employer on several occasions, only some of the time periods may be considered for the purpose of calculating reasonable notice.
In Graham v. Galaxie Signs Ltd., the plaintiff had three separate periods of employment with the defendant employer: 1983-1990, 1990-2002 and 2004-2007. The court held that the onus was on the employee to establish continuing employment, which could be accomplished either by establishing that his return was pre-arranged, or that the employee was given assurance upon his return that past service would be recognized. When the employee was rehired in 1990 after a six month break in service, he was required to fill out documents routinely completed by new employees and he was otherwise treated as a new hire. In 2004, however, his return was treated differently as he was promised his past service would be recognized for all purposes. Given this promise, the court considered all three periods of service when calculating his notice entitlement.
For the purpose of determining the effect of breaks in service on an employee’s statutory notice or severance entitlement, the rules vary between jurisdictions. For example, Alberta’s Employment Standards Code provides that two periods of employment will be considered to be one period for the purpose of notice entitlement where not more than three months have elapsed between the periods of employment. British Columbia’s Employment Standards Act bases entitlement to severance compensation on “consecutive” years of service and Quebec’s An Act Respecting Labour Standards refers to “uninterrupted service,” which indicate these jurisdictions would only consider the most recent period of employment for the purpose of calculating the employee’s statutory entitlement.
When an employer is rehiring a former employee, the best course of action is to enter into an employment contract that explicitly addresses whether past service will be recognized and for what purposes. This eliminates any uncertainty and makes the parties’ intentions and expectations clear from the outset.
For more information see:
•Matheson v. Canadian Freightways Limited, 2003 CarswellBC 2823 (B.C. S.C.).
•Beach v. IKON Office Solutions Inc., 1999 CarswellBC 1482 (B.C. S.C.).
•Chorny v. Freightliner of Canada Ltd., 1995 CarswellBC 41 (B.C. S.C.).
•Graham v. Galaxie Signs Ltd., 2010 BCSC 609 (B.C. S.C.).
