B.C. tribunal cites 'significantly reduced salary and altered working conditions'
A British Columbia employer terminated a worker under employment standards legislation when it offered a substantially different job while the worker was on temporary layoff, the BC Employment Standards Tribunal has ruled.
Caffe Artigiano is a Vancouver-based company that operates a chain of coffee shops in BC and Western Canada. It hired the worker in late 2018.
The worker became a store manager, working 40 hours per week. On March 18, 2020, Artigiano asked the worker to go on a temporary layoff due to the COVID-19 pandemic. The worker agreed.
About one month later, Artigiano offered to rehire the worker to participate in online training programs at 75 per cent of their original salary. The worker would be able to do all of the programs at home. The worker declined and Artigiano said in an email that it would “stay in touch” and keep them posted “as things progress.”
An employee’s refusal of a reasonable offer during an illegal temporary layoff was a failure to mitigate, an Ontario court ruled.
Worker claimed they were terminated
On July 31, the worker filed an employment standards complaint, alleging that Artigiano breached the BC Employment Standards Act (ESA) by terminating their employment and not paying them compensation for their 17 months of service.
Artigiano argued that the worker was not entitled to compensation for length of service, because an exception to that entitlement under the ESA is where an employee was offered and refused reasonable alternative employment by the employer. The company also said that it told the worker that it would keep them informed and return them to their former wage rate sometime in the future.
A delegate for the director of employment standards found that the worker’s employment was terminated on Aug. 31, 2020, which was the legal limit for a temporary layoff under the ESA at the time – 24 weeks in a period of 28 consecutive weeks. As for Artigiano’s offer of alternative employment, the delegate referred to the objective “reasonable person test” – whether a “sensibly officious bystander considers the employer’s alternative employment offer to be reasonable?”
The delegate found that the company’s offer of alternative employment was not reasonable. The nature of the new position was significantly different from the worker’s store manager position, provided less responsibility, and was a significant reduction in wages. An objective reasonable person would not consider the worker’s refusal to accept “a significantly reduced salary and altered working conditions” to be unreasonable, the delegate said.
Employers should seek employee consent before implementing a substantial change to a condition of employment, says an employment lawyer.
Consequences not explained
The delegate also noted that Artigiano did not explain the consequences of not taking the alternative position to the worker – that their employment would be terminated and there was no certainty as to when the worker would return to their former wage rate, which was at the company’s discretion.
The delegate ordered Artigiano to pay the worker two weeks’ wages as compensation for length of services, totalling $1,599.94 plus interest and a $500 administrative penalty for breaching the ESA.
Artigiano appealed the decision on the grounds that the delegate erred in law. The company said that it actually offered the worker 75 per cent of their former hours per week at her former salary, rather than 75 per cent of her former salary. It also argued that it offered the worker the store manager role and the worker refused because of the potential impact on their employment insurance entitlement if the pandemic worsened.
The tribunal disagreed with Artigiano that the offer of alternative employment was reasonable, as it didn’t matter whether the offer was for 75 per cent of the worker’s hours or 75 per cent of their salary. Either would be a significant reduction in the worker’s wage that made the offer unreasonable, said the tribunal. In addition, the delegate considered other factors such as the nature of the work, said the tribunal, noting that even if the worker retained her store manager title, the work was significantly different.
A refusal of a re-employment offer that ignored lost wages during a layoff was reasonable, the BC Court of Appeal ruled.
Substantial change in condition of employment
The tribunal found that the delegate made an error of law by finding that ESA’s provision that employment can been terminated by a substantial alteration in a condition of employment didn’t apply. The worker’s employment was terminated when Artigiano made the offer of alternative employment and substantially altered her job on April 12, 2020, rather than when the statutory layoff period ended on Aug. 31, said the tribunal.
The tribunal also found that the worker’s reason for not accepting the offer – the impact on her EI entitlement – made no difference because the offer wasn’t reasonable for the reasons outlined.
The change in termination date didn’t affect the worker’s compensation for length of service under the ESA, so the tribunal didn’t alter the amount that Artigiano should pay the worker. The tribunal varied the delegate’s determination regarding the termination date and the section of the ESA that was breached, but not the amount owed to the worker. See Caffe Artigiano Inc. (Re), 2023 BCEST 32.
