Quitting before closing date still considered resignation

A British Columbia sawmill’s closure agreement that allowed employees to seek permission to leave for new employment before the mill closed didn’t mean that those employees didn’t quit their jobs, an arbitrator has ruled.

Flavelle Sawmill Company operated a sawmill in Port Moody, B.C. In 2020, the company decided to close the sawmill permanently. It reached a “closure agreement” with the union on Sept. 11, 2020, which labelled Oct. 31 as the mill’s final day of operation.

The closure agreement supported re-employment of the mill’s employees, so it included a provision that the Flavelle mill would “make reasonable best efforts” to accommodate any employees who wanted to leave before the closure date in order to work elsewhere, as long as there was a qualified replacement available and the employee provided at least one week’s notice. Accommodation granted to work elsewhere before the mill closed would not affect employees’ severance entitlement under the closure agreement.

Four of the mill’s employees secured alternate employment before the Oct. 31 closing date. They each requested accommodation under the alternate employment provision, providing at least one week’s notice and a qualified replacement.

Flavelle approved their requests and paid each of the four employees severance pay and their unused vacation credits. However, it didn’t pay them anything in lieu of the remaining notice period until the closing date, taking the position that they had resigned from their employment.

The union filed a grievance on behalf of the four workers, claiming that they were entitled to pay in lieu of notice under the B.C. Employment Standards Act (ESA) — which required notice of group terminations of 50 or more employees within any two-month period of at least eight weeks. The ESA stipulated that the termination pay requirements applied “whether or not the employee has obtained other employment or has in any other way realized or recovered any money for the notice period.”

The union argued that the four employees did not resign from the employment at the mill. When Flavelle granted the accommodation requests and allowed them to leave before the closing date, it effectively shortened the period of notice that the company had given to less than the eight weeks statutory minimum. The closure agreement could not contract out of the statutory minimum, so the employees were entitled to notice up to the mill closing date, said the union.

Flavelle countered that it provided eight weeks’ notice as required under the ESA and the four employees were no longer entitled to termination pay because they quit.

The arbitrator found that Flavelle complied with its obligations under the ESA by providing eight weeks’ written notice for the group termination. The four employees demonstrated a subjective intention to quit their employment before the closing date and the company had no obligation to provide any pay in lieu of notice after they quit, the arbitrator said.

The arbitrator also found that the discretion Flavelle held to grant accommodations was part of a reciprocity agreement where employees received benefits including the ability to find replacement work without jeopardizing entitlements under the closure agreement, while Flavelle could operate without “an exodus” of employees. However, if an employee simply left or sought accommodation to leave for another job, the requisite elements of a quit were present. Each of the four employees “formed the requisite subjective intention to leave the mill,” the arbitrator said.

“The fact the employer held full discretion under the closure agreement to grant ‘accommodation requests’ from employees seeking to leave early, does not negate or otherwise diminish the existence of the essential subjective intention and objective manifestation of a quit triggered by the employee’s request,” said the arbitrator.

The arbitrator determined that Flavelle acted properly under the ESA and the employees quit their employment, disentitling them to the full notice period.