Canada: Employer Liable For Damages, Despite Employee Quitting During Notice Period

Last Updated: April 9 2012

Article by Kelly O'Ferrall and Nasim Jamasbi

The Court of Appeal of British Columbia recently held that an employee was entitled to damages for wrongful dismissal, even after he refused to work during the 5-week notice period provided by his employer. The employee argued that working through the notice period would have been "intolerable".

Facts

The employee, Raymond Giza, was employed by Sechelt School Bus Service Ltd. for 5 years at the time of his termination in September 2009. Sechelt provided Giza with 5 weeks' notice of termination – his minimum entitlement under the British Columbia Employment Standards Act. Giza did not return to work after receiving his letter of termination.

Trial Decision

The trial judge agreed that the 5-week notice period provided was inadequate and the employer had therefore breached the employment contract. Despite this, the judge declined to award damages in lieu of notice to the employee because of the employee's failure to work during the notice period. The judge's view was that, Giza had repudiated the employment contract by quitting at the commencement of the notice period and was therefore not entitled to any damages for wrongful dismissal. The employee appealed the decision.

The B.C. Court of Appeal Decision

The Court of Appeal agreed with the trial judge's conclusion that the notice period provided was inadequate and that the failure to provide adequate notice was a breach of contract on the part of the employer. It did not agree with the trial judge regarding the consequences of such breach; namely, that a failure to work during the notice period disentitled the employee to reasonable notice or damages in lieu thereof.

The Court of Appeal's view of the matter was that the employee's repudiation of the employment relationship brought the relationship to an end but did not eliminate the employee's right to claim damages for such breach (i.e., damages arising from the employer's failure to provide adequate notice). The reasoning for this view was that the repudiation of a contract does not affect any previously accrued rights or obligations of the parties and, according to the Court of Appeal, an employee's right to damages in lieu of reasonable notice accrues at the time when the employee is provided with inadequate notice. Thus, the fact that Giza repudiated the contract after receiving notice of termination did not affect his right to sue for wrongful dismissal.

With respect to the employer's right to the employee's services during the notice period, the Court of Appeal did find that, despite the inadequate notice, the employer still had a right to the employee's services during the 5-week notice period. Accordingly, after finding that the appropriate notice period in this case would have been 6 months, the Court deducted the 5 weeks' notice that was provided to the employee by his employer from the damages award because the employee could have worked and been paid during that period.

Our Views

This case is particularly notable because it may allow an employee to resign during the notice period and still give the employee a right to claim damages from the employer. This is contrary to the widely held view that in order to maintain the right to claim for damages in lieu of reasonable notice of termination, an employee must work during the notice period, if working notice is given.

Practically, this decision could create a disincentive to employees to work during the notice period if they feel the notice provided was inadequate. In such cases, based on Giza, the damages would be equal to the difference between the notice given and what is ultimately found to be reasonable notice. On the other hand, if an employee takes his chances by quitting during the notice period in hopes of getting a more favourable award of pay in lieu of notice, the employee may lose his entitlement to any notice or pay in lieu of notice, if the notice given by the employer is later found to have been reasonable.

Further this decision may create confusion when applied to a situation where an employee is given a combination of working notice and a payment in lieu of notice at the end of the working notice period. Based on the Giza decision, an employee who is given both working notice and pay in lieu of notice could presumably refuse to work during the notice period (thereby repudiating the contract) but still be entitled to the payment portion of the notice period because that right accrued prior to the employee's repudiation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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