Continuance of employment (Toughest HR Question)

What gets counted when hiring back a dismissed employee following dismissal?

Brian Johnston
Question: If an employee is dismissed, receives her entitlement to pay in lieu of notice, and then successfully applies for a different position with the same employer before what would be the notice period is up, does the employee’s previous service have to be counted?

Answer: As with almost all employment law litigation, the cases are fact-specific; therefore, the answer is “maybe.” In this question, the employee is still in receipt of pay in lieu of notice when hired for a different position by the same employer.

Courts generally say short breaks in service do not automatically amount to a break in continuous service. For example, in Beach v. IKON Office Solutions, Ltd., the two breaks — one of 14 months in 1970-1971 and one of 16 months in 1982-1983 — were not significant enough in the context of the employee’s overall years of employment — about 31 years — to constitute a break in service for the purpose of determining reasonable notice. 

Notably, the court said: “With respect to the implications of a break in service, it is common ground that an employer may in certain circumstances be found to have explicitly recognized that a returning employee is to be treated as having maintained continuous employment… Where there is no express term in the re-employment contract dealing with the issue, the question is whether the employer has effectively recognized continuity of service.”

The court found the employee was given more than the starting vacation entitlement when he was hired after the second break and given the maximum vacation entitlement four years later — an entitlement normally given to employees with 15 years of service. In addition, the employee was given service pins and other recognition for a period of service dating to before his rehiring.

“Recently, in Vist v. Best Theratronics Ltd., the Ontario Supreme Court of Justice concluded that a short gap in service did not break service because the rehire contract failed to address ‘length of service for purposes of termination,’” said the court.

“Thus, if an employer does not expressly tell an employee on rehire that it will not recognize prior service, it may not be able to rely on a break in service at a future date, especially where the break is of short duration.”

Some employment standards legislation will also play a role in determining whether there has been a break in service that severs the employment relationship for the purpose of employment standards. For example, s. 77 of the Nova Scotia Labour Standards Code provides:

“(3) Successive periods of employment of a person by an employer constitute one period of employment, except for successive periods of employment more than 13 weeks apart in which case the last employment constitutes the period of employment for the purposes of Sections 71, 72 and 73 [notice sections].”

The short answer is “maybe.” It depends on the facts of each case. The question is best answered when there is an express contract at point of hire limiting future liability for termination as discussed in Beach v. IKON and Vist v. Best Theratronics Ltd.

For more information see:
• Potash Corporation of Saskatchewan (Allan Division) and United Steel Workers, Local 7689 (Dec. 17, 2013), D. Ish – Arb. (Sask. Arb.).

• Luscar Ltd. v. I.U.O.E., Local 115, 2001 CarswellBC 3617 (B.C. Arb.).

• Beach v. IKON Office Solutions Ltd., 1999 CarswellBC 1482 (B.C. S.C.).

• Vist v. Best Theratronics Ltd., 2014 CarswellOnt 7189 (Ont. S.C.J.).

Brian Johnston is a partner at Stewart McKelvey in Halifax. He can be reached at (902) 420-3374 or [email protected]

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