Expiry of Maximum Layoff Period Without Cause Termination: CERB Deducted from Damages
November 30, 2022
Article by:
Janna CrownMike Hamata
Previously printed in The Lawyer’s Daily, a LexisNexis Canada publication.
Angelo Luna Nicolas was a long-service employee at the Pan Pacific Hotel Vancouver, working as a house-person for 32 years with the hotel. He had a half-page letter confirming his employment, and it did not contain any language limiting or restricting severance or the notice period upon termination.
When the COVID-19 pandemic hit in March 2020, the hotel’s business was severely affected, and the hotel reduced its staff as a result. Nicolas was an hourly employee and while he was not guaranteed full-time hours, in the years prior to the pandemic, he worked nearly full-time hours.
The hotel issued a temporary layoff to Nicolas in April 2020. At the time, the government of B.C. had amended the provisions of the Employment Standards Act, RSBC 1996, c 113 (ESA) to allow for extended temporary layoffs due to the pandemic. In anticipation of this deadline, the manager at the hotel took various steps to restructure the workforce, where the remaining employees on temporary layoff would become casual employees and retain their seniority and pay grade.
While the majority of the laid-off staff accepted the offer, Nicolas did not. When the hotel contacted the employees to advise that their extended health benefits would cease as of Jan. 1, 2021, if they remained “inactive” employees, employees were asked to acknowledge that this would effectively terminate their employment with the hotel. The hotel stated that it would pay “the minimum individual termination pay entitlement that would be required under [their] contract for a without cause termination outside the circumstances of [the Pandemic]” (para 17). In the meantime, Nicolas had collected Canadian Emergency Response Benefits (CERB) and obtained alternate employment.
Issues
The issues to be decided were: what is the correct date of Nicolas’ termination; what reasonable notice period is he entitled to; what amounts, including CERB, should be deducted; and should punitive or aggravated damages be awarded.
Analysis
Nicolas pleaded three alternate dates for the termination of his employment: March 27, Aug. 30 or Dec. 9, 2020. The court accepted the Aug. 30, 2020, date as the date of termination as that was the day the hotel referenced in its correspondence with Nicolas, and it was the date the temporary layoff ended under the ESA. In determining Nicolas’ reasonable notice entitlement, the court found the common law applied, because there was not sufficient contractual language to limit notice to ESA minimums. The court applied the Bardal factors: Nicolas was 58, had worked at the hotel for 32 years, his position was entry level, and his new position was part-time with a lower rate of pay (Bardal v. Globe & Mail Ltd., [1960] O.J. No. 149).
The court found that Nicolas had not failed to mitigate in this case: he had obtained new employment before his employment with the hotel was terminated – a fact the court considered in determining what Nicolas’ own expectations were with respect to his work at the hotel.
While Nicolas advocated in favour of a longer notice period ranging from 21 to 24 months, the court found that due to the character of Nicolas’ employment and the fact that he was able to find replacement work quickly, the period of reasonable notice should be reduced. The court set the reasonable notice period at 18 months.
Nicolas argued that CERB is repayable, in which case, he would repay the benefit to the federal government. However, the hotel relied on, and the court followed two decisions of the B.C. Supreme Court that found that CERB is deductible from wrongful dismissal damages (Yates v. Langley Motor Sport Centre Ltd. 2021 BCSC 2175 and Hogan v. 1187938 B.C. Ltd. 2021 BCSC 1021).
Finally, the court declined to award punitive and aggravated damages. In so doing, the court considered that the hotel made an offer of alternate employment to Nicolas on the condition that he dismiss the action against the hotel. The court found this was a real offer to settle the action and found that nothing arose from it.
Takeaway
Employers should ensure that employees have written agreements including language limiting or restricting their entitlements to severance or notice period upon termination. Language limiting that entitlement to ESA minimums needs to be clear, otherwise the common law Bardal factors apply.
While every effort has been made to ensure accuracy in this article, you are urged to seek specific advice on matters of concern and not to rely solely on what is contained herein. The article is for general information purposes only and does not constitute legal advice.
November 30, 2022
Previously printed in The Lawyer’s Daily, a LexisNexis Canada publication.
Angelo Luna Nicolas was a long-service employee at the Pan Pacific Hotel Vancouver, working as a house-person for 32 years with the hotel. He had a half-page letter confirming his employment, and it did not contain any language limiting or restricting severance or the notice period upon termination.
When the COVID-19 pandemic hit in March 2020, the hotel’s business was severely affected, and the hotel reduced its staff as a result. Nicolas was an hourly employee and while he was not guaranteed full-time hours, in the years prior to the pandemic, he worked nearly full-time hours.
The hotel issued a temporary layoff to Nicolas in April 2020. At the time, the government of B.C. had amended the provisions of the Employment Standards Act, RSBC 1996, c 113 (ESA) to allow for extended temporary layoffs due to the pandemic. In anticipation of this deadline, the manager at the hotel took various steps to restructure the workforce, where the remaining employees on temporary layoff would become casual employees and retain their seniority and pay grade.
While the majority of the laid-off staff accepted the offer, Nicolas did not. When the hotel contacted the employees to advise that their extended health benefits would cease as of Jan. 1, 2021, if they remained “inactive” employees, employees were asked to acknowledge that this would effectively terminate their employment with the hotel. The hotel stated that it would pay “the minimum individual termination pay entitlement that would be required under [their] contract for a without cause termination outside the circumstances of [the Pandemic]” (para 17). In the meantime, Nicolas had collected Canadian Emergency Response Benefits (CERB) and obtained alternate employment.
Issues
The issues to be decided were: what is the correct date of Nicolas’ termination; what reasonable notice period is he entitled to; what amounts, including CERB, should be deducted; and should punitive or aggravated damages be awarded.
Analysis
Nicolas pleaded three alternate dates for the termination of his employment: March 27, Aug. 30 or Dec. 9, 2020. The court accepted the Aug. 30, 2020, date as the date of termination as that was the day the hotel referenced in its correspondence with Nicolas, and it was the date the temporary layoff ended under the ESA. In determining Nicolas’ reasonable notice entitlement, the court found the common law applied, because there was not sufficient contractual language to limit notice to ESA minimums. The court applied the Bardal factors: Nicolas was 58, had worked at the hotel for 32 years, his position was entry level, and his new position was part-time with a lower rate of pay (Bardal v. Globe & Mail Ltd., [1960] O.J. No. 149).
The court found that Nicolas had not failed to mitigate in this case: he had obtained new employment before his employment with the hotel was terminated – a fact the court considered in determining what Nicolas’ own expectations were with respect to his work at the hotel.
While Nicolas advocated in favour of a longer notice period ranging from 21 to 24 months, the court found that due to the character of Nicolas’ employment and the fact that he was able to find replacement work quickly, the period of reasonable notice should be reduced. The court set the reasonable notice period at 18 months.
Nicolas argued that CERB is repayable, in which case, he would repay the benefit to the federal government. However, the hotel relied on, and the court followed two decisions of the B.C. Supreme Court that found that CERB is deductible from wrongful dismissal damages (Yates v. Langley Motor Sport Centre Ltd. 2021 BCSC 2175 and Hogan v. 1187938 B.C. Ltd. 2021 BCSC 1021).
Finally, the court declined to award punitive and aggravated damages. In so doing, the court considered that the hotel made an offer of alternate employment to Nicolas on the condition that he dismiss the action against the hotel. The court found this was a real offer to settle the action and found that nothing arose from it.
Takeaway
Employers should ensure that employees have written agreements including language limiting or restricting their entitlements to severance or notice period upon termination. Language limiting that entitlement to ESA minimums needs to be clear, otherwise the common law Bardal factors apply.
While every effort has been made to ensure accuracy in this article, you are urged to seek specific advice on matters of concern and not to rely solely on what is contained herein. The article is for general information purposes only and does not constitute legal advice.