Williams HR Law LLP

RESIGNATION VS. DISMISSAL: INSIGHTS FROM A RECENT BC SUPREME COURT DECISION

August 23, 2023

In the recent decision of  Khangura v Lumberwest Building Supplies Inc. [Lumberwest], the BC Supreme Court (“BCSC”) considered whether an employee was dismissed or had voluntarily resigned, following what appeared to be a miscommunication when the employer conveyed concerns regarding the employee’s work performance.

The Facts  

The employee started working as a salesperson at Lumberwest in December 2020. He entered into a three-year fixed- term employment contract that included a clause allowing the employer to terminate his employment for cause if he breached any term of the contract and failed to rectify the breach within 30 days of being notified by the employer. The contract also included a clause permitting the employer to terminate the employee’s employment without cause by providing written notice or pay in lieu of notice.

In August 2021, the employer sent the employee three emails, the first of which expressed concerns regarding the employee’s work performance and referenced the employer’s right to dismiss the employee for cause if he did not address his performance issues within 30 days. A week later, the employer sent a second email, notifying the employee that due to his failure to adhere to the terms of his employment contract, he should consider the email as 30 days’ written notice to terminate the employment contract. The email specifically stated, “We have provided enough warning to follow the terms of your Employment Agreement. You have continued to refuse to do so. As such please consider this as our 30 days written notice to terminate our Employment Services Agreement.” The next day, the employer sent a third email to the employee, attaching the first email and reiterating its concerns with the employee’s performance.

The employee did not reply to any of the employer’s emails. Instead, believing that he had been given notice of termination, he retained a lawyer, who wrote a letter to the employer asserting that it had terminated the employee’s employment. In response, the employer stated that its intention was not to terminate the employment relationship, but rather to set a timeframe for the employee to address the performance issues. The employer added that it wanted to maintain the employment relationship under the terms of the employment contract. However, the employee maintained that he had been given 30 days’ notice of termination. The employer then issued a Record of Employment on the basis that the employee had “resigned”. Subsequently, the employee brought an action against the employer for wrongful dismissal, claiming that he was entitled to be paid the balance of the remuneration owing to him for the remainder of the three-year term under his employment contract.

The BC Supreme Court’s Decision

The BCSC considered whether the employment relationship had been terminated through dismissal by the employer or through a voluntary resignation by the employee. The BCSC stated that a dismissal requires “a clear and unequivocal act by the employer that, objectively viewed, amounts to a dismissal and which would be understood as such by a reasonable person”. Conversely, a resignation requires the application of both a subjective test, i.e., whether the employee intended to resign, and an objective test, i.e., whether the employee’s words and acts, objectively viewed, support a finding that they resigned.

The BCSC determined that the employer’s emails, read collectively and objectively, did not clearly and unequivocally dismiss the employee. While the employer’s second email to the employee in August stated that it should be considered as notice of termination, the court held that the email could not be considered in isolation, and must be viewed in conjunction with the other two emails sent by the employer in August, which make reference to the employer’s right to terminate the employee’s employment for cause in accordance with the employment contract—that is, if the employee receives written notice of his breach of contract and fails to cure the breach within 30 days.  Although the employer’s emails were confusing, the BCSC stated that this confusion was dispelled when the employer stated that it had no intention of terminating the employee’s employment.

The BCSC held that a reasonable response to the employer’s emails would have been to make further inquiries, as the employee effectively did through his lawyer’s letter. However, the court found that it was unreasonable for the employee to maintain that he had been dismissed without cause  in the face of the clear and unambiguous statements to the contrary.

Ultimately, the BCSC concluded that the employee had effectively resigned from his position in September 2021 by not returning to work and subsequently taking up employment elsewhere. The employer’s communications, while confusing, did not amount to a dismissal. Therefore, the employee’s action for wrongful dismissal was dismissed.

Key Takeaways   

This decision highlights valuable insights for employers regarding effective communication in the context of the employment relationship, especially for delicate matters such as performance concerns and dismissals. When engaging in communications with employees regarding such matters, employers should consider the following key points:

  1. Clear and Unambiguous Communication: Employers should ensure that any decisions or changes related to an employee’s employment status are communicated with clarity and precision. When an Employer has no intention to dismissing an employee, it is imperative that the employer’s actions and communications be consistent with that intention, and that no aspect of their interactions can be objectively interpreted as a dismissal.
  2. Promptly Addressing Misunderstandings: Employers should address potential misunderstandings at the earliest opportunity. This prevents escalation and fosters a health employer-employee relationship.
  3. Documentation of Communications: Employers should meticulously document important interactions with employees in writing. It is essential that employers keep records of emails, letters, text messages, and other forms of correspondence related to performance issues or any other sensitive employment-related matters.

Expertise