Determining breaks in service

How do we treat an employee who leaves but returns shortly thereafter?
By Tim Mitchell
|Canadian HR Reporter|Last Updated: 03/01/2018

Question: If an employee leaves but returns within a very short time, does it matter whether she was originally terminated or she resigned in determining if she has an unbroken term of service?

Answer: When an employee is terminated without cause, an employee is entitled to receive working notice or payment in lieu of notice.

As a rule of thumb, the longer an employee has worked for the same employer, the more notice or pay in lieu thereof the employee is entitled to receive.

When there is an absence or interruption in an employee’s employment, an issue can arise as to whether to treat the entirety of the employment as one continuous period, or disregard any employment prior to the interruption.

Statutorily, this issue is quite clear. Alberta’s Employment Standards Code, for example, recognizes that for the purpose of determining the correct statutory termination notice, two periods of employment are to be considered as one if 90 days or less elapsed between the two periods of employment.

No distinction is made between whether the employee initially resigned or was terminated.

For example, in Thompson Bros (Constr.) Ltd. v. Saar, an employee was laid off and returned to work nine months later.

The fact that the employee was laid off had no bearing on the Alberta decision. The umpire simply applied the 90-day rule to the circumstances and confirmed that the two periods of employment would not be considered as one.

At common law, however, whether an employee resigned or was terminated may be a factor in determining whether the employee was continuously employed.

For example, the fact that an employee is terminated and received a severance package is a factor that breaks the term of service.

As a matter of policy, such a practice prevents double recovery by ensuring that an employee does not receive a reasonable notice entitlement for the same period of time more than once.

In Stant v. Elaho Logging Ltd., the B.C. employee was terminated, received a $20,000 severance, and signed a release for future claims. He returned one year later and was terminated again following nine additional years of service.

The period of employment prior to his first termination was not taken into account in assessing the reasonable notice period for his second termination.

In assessing whether a resignation constitutes a break in employment, considerable weight is put on the reason for the employee’s resignation.

For example, if the employee resigned for family reasons, the courts are less likely to view this as an absence that breaks the term of service: See Brien v. Niagara Motors Ltd.

In contrast, if the employee resigned to work for a competitor, the absence will likely break the term of service, as in Gibara v. ABN Amro Bank Canada.

Other factors are relevant to determining a break in service, such as the length of absence in relation to the length of overall service, whether the employer induced the employee to return, and whether the employee returned with recognition of her prior seniority: See Balchin v. Die-Cast Marwest Ltd.

In Graham v. Galaxie Signs Ltd., the employee had two breaks in service issues. The first break was a six-month unapproved leave during which he worked for a competitor of the employer.

The employee could not establish that his return was pre-arranged or that, upon return, his past services were recognized.

As such, the first absence was deemed to break his term of service.

The second absence was for two years. The British Columbia employer recruited the employee to come back, and the employee bargained for the recognition of his past service and retention of seniority.

This included six per cent holiday pay, rather than four per cent, reflecting a longer period of service.

The court also accepted the verbal commitment of the employer, which, in inducing the employee to return, stated, “It will be like you never left.”

Because of this, the second absence did not break the term of service.

For more information, see:

• Thompson Bros. (Constr.) Ltd. v. Saar, 2012 CarswellAlta 2359 (Alta. Ump. Under Emp. Stndrds. Code).

• Stant v. Elaho Logging Ltd., 2017 CarswellBC 1105 (B.C. S.C.).

• Brien v. Niagara Motors Ltd., 2009 CarswellOnt 7820 (Ont. C.A.).

• Gibara v. ABN Amro Bank Canada, 2003 CarswellOnt 4026 (Ont. S.C.J.).

• Balchin v. Die-Cast Marwest Ltd., 1987 CarswellMan 17 (Man. Q.B.).

• Graham v. Galaxie Signs Ltd., 2010 CarswellBC 1061 (B.C. S.C.).

Tim Mitchell practises management-side labour and employment law at Norton Rose Fulbright in Calgary. He can be reached at (403) 267-8225 or tim.mitchell@nortonrosefulbright.com.

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