Recently, two British Columbia court cases considered the effect of an employee refusing to work after a period of working notice was provided by the employer.
In Allan v. Ainsworth Lumber Co. Ltd.,1 the employer provided notice of termination to the employee in accordance with an employment contract that provided that the employee would receive 15 months’ salary and benefits or “pay in lieu”. The company gave the employee a letter stating he would be terminated 15 months later, but that he was no longer required to report to work and was to focus his time and energy instead on securing new employment. He was asked to leave the building that day and to turn in any company property. He no longer had access to his company email, telephone or voicemail.
The employee brought a legal action and claimed that the 15 months’ pay in lieu of notice was not really notice, but a debt due under his employment agreement. The employer denied that it had terminated his employment and argued instead that it gave the employee 15 months’ working notice while also assigning him to new duties devoted exclusively to searching for new employment.
In considering these issues, the Court found that the employer’s letter did, in fact, end the employee’s employment. It noted that termination must be clear and unequivocal, and that recognition would not be given to an employer who intentionally creates ambiguity through its own words and conduct and for its own advantage. The Court also rejected the employer’s argument that the employee had been constructively dismissed and held that the purported giving of working notice to the employee was simply a guise for actual immediate termination. Therefore, the employee was awarded 15 months’ notice in accordance with his employment contract and damages for a lost bonus which had formed a significant part of his compensation package.
In another decision, Giza v. Sechelt School Bus Service Ltd.,2 a part-time bus driver was terminated without cause and provided with five weeks’ notice, based on his employer’s belief that the statutory notice period in the Employment Standards Act was sufficient. The employee did not return to work after receiving this notice. At trial, the Court held that although inadequate notice had been given, the plaintiff had quit, and therefore was not entitled to damages for wrongful dismissal. However, the Court of Appeal overturned the trial judge’s finding that the employee’s failure to work through the notice period disentitled him to any damages. The Court agreed that the employee’s failure to work during a notice period repudiated the employment relationship and brought it to an end, but held that the employee was still entitled to receive reasonable notice because that right arose before the repudiation. The Court of Appeal agreed that the notice provided was not sufficient and calculated reasonable notice to be six months, but deducted one month for the time the employee could have worked with pay for the employer.
Based on these cases, employers should take into account several practical considerations when deciding whether or not to provide an employee with a lengthy working notice period rather than pay in lieu:
- Carefully review and consider the actual terms of an y applicable employment agreement concerning termination, and ensure tha t there is an option to provide working notice of termination as opposed to a lump sum payment in lieu. Ensure that the emplo yee is being provided with the specific entitlements outlined in any employment agreement.
- If the employee is provided with a lengthy working notice period, ensure that all of the same terms and conditions of employment continue, and be cautious not to significantly change any of the employee’s duties or obligations during the notice period (inc luding working from home or not working a t all) without clear agreement from the employee.
- Consider carefully the length of the period of notice to be given, where none is specified in the employment agreement. Where practicable, provide a period of notice that is in the range of common law notice. Alternatively, consider partial working notice followed by pay in lieu for the remainder of the employee’s entitlement.
Given the increasing complexities of damages claimed in wrongful dismissal actions, including those relating to benefit continuation, working notice periods are often an effective way of discharging an employer’s termination obligations. However, as these recent cases demonstrate, working notice is not necessarily simple in practice, and often an employer’s best intentions can still result in liability. For this reason, it is important to carefully consider all of the relevant circumstances and factors before implementing a period of working notice.