‘It won’t establish a resignation simply because an employee isn't reaching out during a layoff period’
A long-term employee who was temporarily laid off during the COVID-19 pandemic and wasn’t recalled because the employer erroneously thought he had retired was wrongfully dismissed, a BC court has ruled – but he was only entitled to a relatively short reasonable notice period because he did intend to retire within a short time.
Askanda Business Services sells and services draft beer equipment. The worker was hired in 1987 to perform most of the servicing work and was the company’s first employee. Over time, he eventually he became the only remaining employee after others left. He worked part-time and on an hourly basis.
The worker intended to retire at the age of 65, when he would be eligible to receive Old Age Security and Canada Pension Plan benefits and could care for his three young children. Occasionally, the topic of his retirement came up in casual conversation, but the worker didn’t discuss a specific date.
In March 2020, when the worker was 63 years old, the COVID-19 pandemic hit and the bars and restaurants which Askanda serviced were closed. Askanda had to temporarily lay off the worker.
Askanda issued a record of employment (ROE) indicating that his expected date of recall was unknown. The worker applied for employment insurance (EI) and the Canada Emergency Response Benefit (CERB), receiving that latter shortly thereafter.
Retirement comment
The worker called Askanda’s owner on May 31 to get a sense of when he might be able to return to work. He also told the owner that he had decided to move with his family to another town, saying that “he might as well just retire.”
The owner was shocked by the worker’s comment, as he understood this to mean the worker was retiring. However, he didn’t ask any questions or seek clarification on the worker’s intentions or time frame.
Askanda also didn’t provide a revised ROE, as the owner felt that it would be a difficult process and he didn’t want to affect the worker’s CERB benefits.
The worker’s CERB benefits ran out in August and he started receiving EI benefits, which were more than what he had earned with Askanda in the previous two years. Neither Askanda nor the worker made any further attempt to contact the other for more than year.
The worker’s EI benefits ran out at the end of August 2021. In early October, the worker called Askanda’s owner asking if he might be entitled to severance payments. The owner said he would look into it, although he thought it was unlikely because he thought the worker had retired. The worker didn’t ask for his job back and the owner didn’t offer to bring him back.
Wrongful dismissal claim
About a month later, the worker filed a claim for wrongful dismissal, seeking two years’ pay in lieu of notice plus punitive damages – which would take him from the date of his layoff to when he planned to retire at age 65 in March 2022. He argued that his wrongful dismissal stemmed from Askanda not calling him back to work after his statutory layoff period expired and he was still waiting for a recall when he realized he might be entitled to severance pay in October 2021.
Askanda contended that the worker voluntarily retired and, if the owner believed that the worker was still available, he would have called him back when the company resumed operations in the spring of 2021.
The court found that while the worker may have discussed the possibility of retirement with Askanda’s owner, his statements didn’t amount to a resignation. It noted that “resignation requires the consideration of both subjective intent and objective conduct, considering both whether an employee intended to resign, and whether the employee’s words and acts, objectively viewed, support a finding that they resigned.” The worker’s statement that “he might as well retire” on a phone call fell short of being a clear and unequivocal act of resignation, the court said, adding that there were no clear actions by the worker afterwards that indicated an objective intention to resign.
As a result, it was necessary for Askanda to follow up and ask the worker about his intentions in a timely manner, and this likely would have clarified that the worker had no intention of resigning – as that would have forfeited his entitlement to EI and CERB benefits, the court said.
A simple statement such as the one the worker made over the phone just wasn't unequivocal enough to establish that he had resigned or that he intended to resign, says Debbie Preston, an employment lawyer at Harris and Company in Vancouver.
“This case does a great job of pointing out that in the context of a resignation, that very brief statement simply wasn't enough to establish that [the worker] had resigned,” she says. “If an employer is questioning whether or not an employee has resigned, it requires very clear and unequivocal communication from that employee – it’s advisable to receive that in writing so there’s something to refer back to rather than just a phone call.”
Constructive dismissal
The court also found that Askanda didn’t recall the worker before the statutory deadline for temporary layoffs in BC – which had been extended from 13 to 24 weeks during the pandemic - of Aug. 30, 2020. The only reason for the dismissal was the incorrect belief that the worker had resigned and no reasonable notice was provided, said the court in finding that the worker was constructively dismissed.
Although the worker didn’t reach out to say he was interested in coming back to work, that didn’t work in the employer's favour, according to Preston.
“It won’t establish a resignation simply because an employee isn't reaching out during a layoff period - an employer wouldn't be able to necessarily rely on that if the employer itself didn’t reach out,” she says. “It would of course be different if the employer had reached out and not heard back from the worker, but in this case neither the employer nor the worker had reached out, so it wouldn't support a finding of resignation.”
As for the worker’s actual termination date, the court determined that it should be Sept. 1, 2021. Even though the statutory layoff period ended long before that date, the worker likely would have agreed to continue the layoff had he been asked by Askanda, as he received EI benefits that were roughly equivalent to his prior income until then, the court said, adding that the evidence was that Askanda had virtually no work available until at least May 2021 due to pandemic restrictions and the worker didn’t contact the company until after his EI benefits ran out.
Reasonable notice
In assessing the reasonable notice period, the court noted that the “purpose of reasonable notice is to provide the employee with a fair opportunity to obtain similar or comparable re-employment.” While the worker’s age, 30 years of service, and relatively niche experience favoured a longer notice period, the court also noted that the worker was firm that he had plans to retire at age 65 – two years after his layoff date. As a result, the worker was only entitled to damages for reasonable notice from the date his extended layoff ended on Sept. 1, 2021, to when he turned 65, when the worker no longer intended to work or look for work – which was a period of six months.
“The worker testified quite clearly and strongly that he didn't intend to retire at 63 and he hadn’t informed [Askanda] of that intent, but he very clearly established - to the benefit of the employer - that he did intend to retire at 65,” says Preston. “Had he not been wrongfully dismissed, he intended to work until 65, so it wouldn't be just or equitable to pay him beyond the date - while reasonable notice entitles an employee to be put in the same position had they not been wrongfully dismissed, it doesn't entitle them to be put in a better position.”
The court also found that Askanda didn’t meet the burden of establishing that the worker failed to mitigate his damages and the company’s conduct didn’t meet the high threshold required for punitive damages.
Based on the worker’s average income for the three years prior to his layoff, Askanda was ordered to pay the worker $14,500 representing six months’ reasonable notice.
“Whenever you're dealing with a situation where there’s a questionable retirement or resignation, it's always best to get that in writing from the employee so that it's clear and unequivocal, and something that you can rely on,” says Preston. “And in the circumstances of a layoff, employers need to be aware of the rights and obligations of both parties and where the liability risk will arise if an employee isn’t recalled to work within the amount of time set out by employment standards.”
