'The court will ask whether the employee clearly and voluntarily communicated an intention to end the employment relationship'
A British Columbia court has dismissed a worker’s wrongful dismissal claim alleging that he was forced to retire after nearly four decades with his employer.
The decision confirms that retirement is treated in law the same way as a resignation, according to Brooke Finkelstein, an employment lawyer and workplace investigator at West Coast Workplace Law in Richmond, BC.
“Although the reasons may differ, with retirement often being planned in advance and linked to age, the legal test remains the same,” says Finkelstein. “The court will ask whether the employee clearly and voluntarily communicated an intention to end the employment relationship and whether the employer accepted that communication - in law, once an employee clearly communicates an intention to retire and the employer accepts that notice, the decision becomes binding.”
The worker was a licensed agrologist hired in 1982 by Ritchie-Smith Feeds (RSF), a company providing animal feed to livestock and poultry farmers based in Abbotsford, BC. Over several years, RSF joined with Sure Crop Feeds (SCF) and McLeod’s By-Products (MBP) to create an RSF group of companies. Since 1992, the worker held managerial positions with SCF and MBP.
SCF was a small company with no formalized process for retirements – generally, an employee planning on retiring would discuss it with senior management and plan to train a replacement. Some employees delayed their retirements or stayed on after their retirement date, if SCF and RSF allowed.
Retirement discussions
In 2013, the worker’s own company signed a partnership agreement with RSF that set out the conditions for a partner’s withdrawal, including a mandatory retirement age of 67. The retirement age could be extended by the managing partner and a partner could also retire by voluntarily resigning with two years’ written notice.
On Jan. 22, 2021, the worker told the CEO of the RSF group of companies that they should discuss his retirement date, as he was 63 years old and had the two-year notice requirement in the partnership agreement. They had a meeting and the CEO stated in his March report that the worker “is considering setting a retirement date in the next 12 months.”
The worker’s retirement was discussed again in April and the worker agreed to come up with a plan for his retirement. They met again in September to discuss the worker’s plans.
In an Oct. 4 meeting they agreed that Jan. 31, 2023, would be the worker’s retirement date. The CEO understood that the worker was offering to retire and confirmed with the worker that he could share that date with the management team at an upcoming retreat. However, according to the worker, the date wasn’t a “hard target” and it remained flexible.
The CEO shared the worker’s retirement date at the retreat a couple of days later and the worker, who was present, expressed no concerns about the announcement.
Transition plan
In February 2022, the CEO wrote to the worker about a transition plan for his position and said that the company wanted to honour his nearly 40 years with RSF, calling 2022 a “capstone” year in which he could “finish strong.” The worker didn’t express any concerns about 2022 being his last year with RSF. He later claimed he believed “finish strong” referred to the company’s performance for the year.
RSF continued to make succession plans for the worker’s position over the course of 2022. The worker met with the CEO on Aug. 22 and asked to change his retirement date to April 2023 because of accrued vacation time. The CEO suggested March 31, to which the worker agreed. The worker didn’t say much else, although he later claimed that he felt under pressure to agree to March 31. He claimed he still felt he could change his retirement date, as others had done.
The worker met with the CEO and another manager in October and the CEO gave him a brochure for a cruise, which the worker understood was a retirement gift.
On Oct. 26, 2022, the worker emailed the CEO to say that he needed to delay his retirement by a year, as his retirement portfolio wasn’t where he wanted it to be. The CEO encouraged him to stick with the original plan because succession planning was well underway and it would be disruptive to change the schedule. The worker apologized but maintained his position, believing that his retirement date had never been definite.
The CEO and the worker met on Jan. 13, 2023, and the CEO said that the worker’s role was going to be offered to another executive. The worker said that the executive hadn’t received training and suggested he could delay his retirement to train him.
Request to change retirement date
They met again four days later, and the worker believed the CEO said he could continue to work. However, they exchanged emails over the next few days and the worker said he would retire on March 31 if the company provided six months’ salary in lieu of notice. The CEO declined and, on Feb. 9, wrote to the worker to confirm that his employment “will conclude on March 31, 2023, consistent with your retirement date.”
The worker commenced legal action against the RSF group of companies, alleging that he was wrongfully terminated and seeking damages in lieu of notice. RSF maintained that the worker voluntarily resigned by retiring.
The court noted that “retirement is essentially a decision made by the employee to terminate or repudiate the contract of employment” and is legally the same as a resignation. As a result, the test is the same as that for determining a resignation, the court said – whether the employee subjectively intended to resign and whether the employee’s words and actions, objectively viewed, indicate a resignation.
The court also noted that an employee can change their mind about retiring if their offer to retire hasn’t been accepted by the employer or the employer hasn’t relied on the employee’s expressions of their intention to retire.
Intention to retire
In these circumstances, the court found that it was clear that the worker intended to retire on March 31, 2023, pointing to the worker’s October 2022 email in which he wanted to delay his retirement by a year. Despite the worker’s claim that he hadn’t set a definitive date, this email showed he understood that March 31 was a set date, the court said.
“In his communications, the worker specifically identified March 31 as his retirement date and told the RSF it could begin recruiting for his replacement, and he was also aware that the position had been posted, yet he remained silent on this for several weeks,” says Finkelstein. “The court found that these inconsistencies, combined with the documentary evidence, made the worker’s version of events unreliable.”
The court also pointed out that the worker had previously asked to extend his retirement from Jan. 31 to April 2023 and he agreed with the CEO on March 31 as a retirement date. The worker’s consent to the revised date was voluntary with no evidence that he was under pressure or duress, said the court.
The court also found that the worker had agreed to the initial retirement date and raised no concerns when it was announced at the October 2021 management meeting or during subsequent discussions about succession planning.
The court focused on the worker's words and conduct at the time that he communicated his intention to retire, says Finkelstein.
“[The worker] told [RSF] that he planned to retire on March 31 and then invited the company to begin the process of recruiting his replacement - that language was clear and forward-looking, and left little room for uncertainty,” she says. “The court also considered the surrounding circumstances, including the fact that the employer began transition planning and posted his role - the company’s subsequent actions confirmed that that notice of retirement had been understood and reasonably acted upon.”
Voluntary offer to retire
Assessing both the subjective and objective elements of resignation, the court found that the worker’s actions and communications constituted a clear and unequivocal retirement offer that was voluntarily made. The court determined that the worker had offered to retire and RSF accepted, with the company moving forward with transition plans including succession discussions with identified replacements.
The court dismissed the worker’s claim for wrongful dismissal damages.
Although it was found that RSF acted appropriately in its communications with the worker and its transition planning, one thing it could have done better was to accept the worker’s retirement date in writing, according to Finkelstein.
“While it wasn’t absolutely necessary in this case, a written acknowledgement would have provided added clarity and strengthened the employer's position,” she says. “Documenting that acceptance in writing remains a best practice that can help prevent these disputes from arising – and it might have further taken away any argument by the worker that he was assuming all along that it wasn't definite.”
