In the recent decision of Anderson v Total Instant Lawns Inc [Anderson], the Ontario Superior Court of Justice (the “Court”) ruled that an employee who ceased performing her duties and refused to return to her employment until certain conditions were met had repudiated her employment contract.
Ms. Anderson was employed by Total Instant Lawns Ltd. (the “Company”), where she was responsible for scheduling and tracking the hours of the Company’s other employees, as well as administering the Company’s payroll.
Ms. Anderson left the Company’s office following a dispute with the Company’s CEO regarding the final paycheque of Mr. Valley, another employee of the Company, who was also Ms. Anderson’s husband. It was unclear whether Ms. Anderson intended to return to work on the following Monday. Before leaving, Ms. Anderson communicated to a co-worker that her employment had been terminated, a fact that the CEO disputed.
On the evening of her walkout, several employees of the Company attended a meeting at Ms. Anderson’s home, where they prepared and signed a “Strike Notice,” a document that outlined certain demands, including:
- all employees who were wrongfully terminated, namely Ms. Anderson, were to be allowed to return to their former positions;
- Valley was to be paid the disputed wages he was allegedly owed; and
- Anderson was to be given the authority to schedule Company workers without alterations from the CEO, who had previously made frequent changes to the schedule.
The employees who signed the Strike Notice, including Ms. Anderson, refused to return to work until these demands were met.
After receiving the Strike Notice, the Company’s CEO communicated to Ms. Anderson that she was barred from Company property. Both Ms. Anderson and the CEO agreed that her employment ceased at that moment.
Ms. Anderson launched a wrongful dismissal claim. The Company counterclaimed, arguing that Ms. Anderson had either resigned from, abandoned, or repudiated her employment. The Company also brought a claim for wrongful resignation, claiming that it suffered damages because of Ms. Anderson’s departure.
The Court determined that Ms. Anderson had repudiated her employment contract. Ms. Anderson’s wrongful dismissal claim was dismissed.
The Court outlined the test for finding that an employee had repudiated their employment contract, stating that an employer may be justified in terminating a worker’s employment based on repudiation where said worker refused to perform an “essential condition” of their contract, or refused to perform their job responsibilities in a manner that was “directly incompatible” with their obligations to the employer.
The evidence demonstrated that Ms. Anderson had no intention of resuming her job responsibilities unless certain conditions were met. The Court found that Ms. Anderson had also failed to perform her employment duties prior to the Strike Notice, by failing to record Mr. Valley’s hours in the same manner as the Company’s other employees and preparing the Company payroll accordingly. Finally, Ms. Anderson was also an active participant in the work stoppage that happened as a result of the Strike Notice. The Court found these circumstances sufficient to determine that Ms. Anderson had repudiated her employment contract.
Though Ms. Anderson’s wrongful dismissal claim was ultimately dismissed, the Company’s wrongful resignation claim was dismissed as well. The Court determined that there was no evidence that the Company suffered losses or costs that were in excess of what it saved by not paying Ms. Anderson’s salary during what would have been the resignation notice period, which is a necessary element of a wrongful resignation claim. The Court found that while Ms. Anderson had been actively involved in the work stoppage, there was insufficient evidence to find that she had organized it, meaning that the Company’s losses in connection with the stoppage could not be attributed to Ms. Anderson’s departure.
Takeaways for Employers
In a previous blog, we examined a decision in which an employer was found to have repudiated its employment contract with an employee after failing to comply with the termination provisions set out in the contract. Anderson demonstrates that the repudiation of an employment relationship can go both ways.
Employers that experience workers refusing to work unless certain conditions are met, or otherwise refusing to perform their job responsibilities, may be justified in terminating the employment of said workers on the basis that the employees have repudiated the employment relationship. If employers find themselves dealing with such an employee, they should make sure to document the behaviour, in order to demonstrate that the employee’s conduct was directly incompatible with their employment obligations. Documentation of this nature would assist the employer in demonstrating that the employee repudiated the employment relationship, and could support a defense to a wrongful dismissal claim, as occurred in Anderson.
Employers should also note that, as demonstrated in Anderson, damages for wrongful resignation are rare. To prove that it is entitled to such damages, the employer must prove that it suffered a loss as a result of the employee’s breach of contract, and that the loss exceeded the amount that the employer saved by not paying the employee’s salary during the resignation notice period. Additionally, such damages are rare because of the difficulties, in many cases, of quantifying the cost of an employee not completing the resignation notice period.
Finally, Anderson serves as a reminder that employers wishing to rely on what they believe to be a resignation from employment must ensure that the intention to resign is clear and unequivocal. As such, any resignation should be documented, and confirmed clearly in writing.
This blog is provided as an information service and summary of workplace legal issues.
This information is not intended as legal advice.