Restarting the service clock​

By Jeffrey R. Smith

Despite the old saying, “You can’t go home again,” maybe you can — it just depends on how you left.

When an employee quits and later returns to work for the same employer, these are generally considered two separate stints, so the employee’s service time dates back to the beginning of the second stint — and the reasonable notice entitlement is shorter than it would be if the employee had never left, in the event of a without-cause dismissal. 

Sometimes, if the employee was dismissed but rehired within a short period of time, courts consider it one term of service — or the employer, in a gesture of goodwill, recognizes the employee’s original start date. But, usually, an interruption in employment results in a new start date — especially if the employee’s earlier tenure was ended by a resignation.

But what if the employee never actually left the employer’s service?

Consider the case of a dental hygienist who started working for an Ontario dental practice in 1993. Her employment was subject to a series of employment agreements that limited her notice entitlement in the event of a without-cause dismissal to employment standards minimums. Twelve years into her tenure with the dental practice in 2005, she resigned as she had plans to move out-of-town with her fiancé.

Unfortunately for the worker, before the date of resignation she had provided, her engagement ended and she decided not to move. She asked to continue working at the dental practice, and the owner agreed. The worker was given a new employment agreement effective one week before her resignation date, so she never stopped working at the practice and it never issued a record of employment.

The worker continued to work at the dental practice for more than seven years, until late 2012 when she was dismissed without cause. The worker sued for wrongful dismissal and a trial judge awarded her 15 months’ common law notice for her 19 years of total service with the practice, noting that the employment agreements she had signed weren’t valid due to a lack of consideration. 

However, the Ontario Court of Appeal disagreed, finding the worker had clearly and unequivocally resigned in 2005. Though she hadn’t actually stopped working for the dental practice, her initial stint ended when she resigned and a new tenure began when it rehired her just before her date of resignation. Being hired back was the consideration the worker received for the new employment agreement, so that agreement — and its termination clause limiting notice to statutory minimums — was valid. 

And the worker’s notice entitlement was tied to her service since she was rehired — seven years — so the court awarded the worker 7.5 weeks’ statutory notice: see Theberge-Lindsay v. 3395022 Canada Inc. (Kutcher Dentistry Professional Corporation), 2019 ONCA 469 (Ont. C.A.).

A key factor in the above circumstance is that the worker didn’t rescind her resignation with employer then accepting it — rather, she resigned, asked to come back, and the employer rehired her under a new employment agreement — essentially starting from scratch. The previous 12 years with the employer were off the books with the resignation.

There are many employment law cases that centre around who terminated the employment relationship — did the employee quit or was she fired? These cases are usually decided by an analysis of whether the employee’s alleged resignation was clear and unequivocal. If it is, the employer is free of any termination and severance pay entitlements that would accompany a dismissal. 

And now it appears a clear and unequivocal resignation can be a way to limit reasonable notice of dismissal in the event the employee who resigned is welcomed back quickly — even if the employee never really left.