Our common law of wrongful dismissal establishes most employees’ entitlement to notice of termination (or pay in lieu) based, primarily, on the employee’s tenure. What some employers don’t know is that a court may regard that tenure as continuous through one or more breaks in service.
When an employee has served the employer for two (or more) discrete periods, the employee will (upon termination) tend to claim damages based on the total length of the combined periods of service. The employer may oppose that method of calculation, insisting that only the most recent portion of service should be counted.
The courts are called upon to resolve this stalemate. Two recent court decisions demonstrate judges’ willingness to overlook lengthy breaks in service when determining an employee’s tenure.
In B.C., Graham was an employee of Galaxie Signs Ltd. until 2007 but, between 2002 and 2004, he had worked elsewhere. He returned to Galaxie after his two year break, however, on the basis that his seniority would be maintained.
After the termination of his employment in 2007 he sued for damages for wrongful dismissal. In doing so, he relied upon the premise that his period of service should include the pre-2002 period. Galaxie took the view that the only relevant period for calculating his entitlement to pay in lieu of notice was the final period between 2004 and 2007.
The B.C. Supreme Court agreed with Graham that his period of service should include the pre-2002 period with the result that he was treated as a 14 year employee.
The Court accepted the evidence of Graham that a verbal commitment was made by Galaxie that his past service would be recognized for all purposes – “it will be like you never left” – including that of calculating severance, in the event of his wrongful termination.
As a result, Graham was awarded 10 months pay in lieu of notice.
In Ontario, Brien had been an employee of Niagara Motors Limited for 23 years. There was, however, a 2 year break in service after Brien had her second child.
After the termination of her employment, she sued for wrongful dismissal damages and, in doing so, sought to rely upon her entire 23 years of service.
The Ontario Court of Appeal rejected Niagara’s assertion that a shorter period of service should be considered. It stated that Brien “was invited back after two years even though she was not on official maternity leave.”
She was “reintegrated into the employer’s employment as if she had never left”. As an example of that “reintegration”, the Court referred to her having been given 2 weeks vacation within the first year without first working for 12 months as a new employee would have to.
As a result, Brien’s entire 23 years of service was taken into account in determining that her entitlement to pay in lieu of service was 24 months.
The sure method for the employer to insulate itself against such claims is to address the period of service issue at the time when the employee is rehired, not when he or she is later fired. Simply documenting in the hiring materials, with evidence of the employee’s acceptance, that prior periods of service will not be recognized for any purpose would go a long ways towards stopping such claims in their tracks.
Related to How Long Have You Worked Here?