Wrongful dismissal damages for employee fired after fire upheld, Canadian Employment Law Today (March 23, 2011)

Wrongful dismissal damages for employee fired after fire upheld, Canadian Employment Law Today (March 23, 2011)

By Nikolay Y. Chsherbinin

A resignation is matter of substance, not form. To constitute a valid resignation, there must be unequivocal evidence supported by conduct consistent with an employee’s intention to voluntary resign her employment. The employee’s conduct before and after the supposed resignation is relevant in making the determination. A recent British Columbia Court of Appeal decision, Beggs v. Westport Foods Ltd., serves as a useful reminder that employers who jump to the conclusion that an employee has resigned, without inquiring into reasons for the employee’s prolonged absence, do so at their economic peril.

Jantsje Beggs, 52, was a 10-year employee of the Fairway Market in Port Alberni, B.C., which was owned by Westport Foods. On Feb. 18, 2009, a fire destroyed her house. The following day she called her employer and advised that she did not know when she would be able to return to work. On March 16, 2009, having not heard from Beggs for almost a month, her manager instructed the payroll department to prepare a Record of Employer (ROE).

On April 3, 2009, unbeknownst to her employer, Beggs was diagnosed with anxiety and depression arising from the circumstance around the fire. In order to receive disability employment insurance, Beggs obtained a medical note stating that she was unfit to work and would be re-assessed at the end of May 2009. Consequently, she called her employer to ask for the ROE based on sick leave. She was advised the ROE had been prepared for her already and was ready to be picked up.

At this point, both parties were operating on a misunderstanding about the other’s intention concerning their employment relationship. After reviewing the ROE, Beggs learned that she apparently had quit. Beggs interpreted the ROE, which she received together with her final paycheque, as a dismissal and retained legal counsel.

A dialogue ensued between Begg’s lawyer and Westport’s counsel, which resulted in an offer to return her to work. The language of the letter that purported to offer the job was guarded and ambivalent, leaving Beggs uncertain on what her situation would be. She rejected the offer and sued for a wrongful dismissal. Westport demurred, arguing Beggs had resigned and failed to mitigate her damages by not returning to work.

The trial judge sided with Beggs and awarded her 11 months’ pay in lieu of notice and $20,000 in moral damages for mental distress. On appeal, the pay in lieu of notice was upheld, while the mental distress damages were overturned. In upholding the trial judge’s finding that Beggs did not resign, the Court of Appeal re-stated the test for resignation:

“(A) finding of resignation requires the application of both a subjective and objective test: whether the employee intended to resign and whether the employee’s words and acts, objectively viewed, support a finding that she resigned.”

This test stresses the importance for employers to learn to distinguish between the employee’s words and acts. Verbally saying “I quit,” writing “I hereby resign” or the physical act of absenteeism are not, in and of themselves, the employee’s decisions to end the employment relationship. They are mere evidence of the employee’s intention to do so. The critical factors for assessing the voluntariness of the employee’s resignation are the employee’s state of mind and any ambiguities in relation to the conduct which is alleged to constitute resignation and, to a certain degree, the employee’s timely retraction, or attempted retraction, of her resignation.

The Beggs decision serves to underscore the onus which employers bear, in almost all circumstances, of proving the employee resigned. In many cases, this involves reaching out to the employee using any means of communication and seeking out any mitigating circumstances, ensuring she has understood all of the circumstances surrounding the resignation and not rushing, as the case demonstrates, to file the ROE indicating that the employee had quit.

Employers who opportunistically or carelessly snap up, or infer, the employee’s resignation, do so at their own risk. In cases where the absence is in any way caused by the employee’s personal crisis or health issues, employers are advised to reinstate the employee to her previous position. Such a good-faith approach would serve to repair the employment relationship and avoid costly litigation.

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