One of the most common questions faced by employment lawyers concerns how bad news about their employment status should be delivered to employees on leave. Leaves may occur for many reasons including maternity, illness, vacation, or leave of absence.
This has been a controversial area but our Court of Appeal has provided a little guidance in a recent case – Lewis v. Terrace Tourism Society. Ms. Lewis was on maternity leave when her employer determined that it needed to close its operations due to financial pressure.
The employer did not provide any notice to Ms. Lewis, however, Terrace being a small town, she was aware that her employer was in the process of dissolution. She was concerned that her employer would be dissipating its assets while she was on maternity leave so she commenced action claiming that she had been constructively dismissed. The employer then terminated her employment allegedly for cause arguing that suing an employer during the currency of the employment contract amounts to a repudiation of the contract.
The Supreme Court agreed with his argument and denied Ms. Lewis a remedy. She appealed successfully to the Court of Appeal. The Court of Appeal found that an employer can and should give notice of termination in the circumstances (which it said amounted to a constructive dismissal).
The other issue in the case, which is also controversial, is whether an employee who has been constructively dismissed can commence action against his or her employer while continuing to work for the employer. Previous cases in British Columbia have established reluctance on the part of the courts to allow an employee to sue an employer while still employed. In this case the Court of Appeal distinguished these cases by pointing out that the constructive dismissal was based on the fact that the employer had ceased operations and there was no work for her (even if she had not been on leave).
The question of Ms. Lewis’ damages was referred back to the trial courtt for determination.
We believe that if the case is upheld by the Supreme Court of Canada (it has been suggested that it will be appealed to the Supreme Court of Canada) that the following principles can be drawn from the case:
a) there is an obligation on the part of an employer who is ceasing operations to provide notice of termination to an employee on leave;
b) we do not believe that the notice so given releases the employer from any obligation to pay severance pay;
c) if an employer in the circumstances does not provide notice of termination the employee is permitted to sue for constructive dismissal without concern that such claim would be deemed a repudiation of the contract of employment (in other words a resignation).
We still recommend that employers be cautious in terminating employees on leave where the reasons for termination relate to performance, or lack of it, on the part of the employee.
Alf Kempf practices Labour and Employment Law at Pushor Mitchell. You can contact him at [email protected]
