In Khangura v Lumberwest Building Supplies Inc., 2023 BCSC 1053, the Supreme Court of British Columbia dismissed an employee’s claim that he was entitled to damages because he had been wrongfully dismissed without cause. The court found instead that the employee voluntarily resigned from his position and was aware that his employer wanted to maintain their employment relationship.

Background

The employee began to work for the employer in December 2020. In August 2021, he received three emails from the employer. The first email, dated August 4th, listed the employer’s concerns with the employee’s performance and referenced the employer’s right to terminate him for cause under the employment contract. On August 11th, the employer sent the employee a second email stating that since the employee had continued to not follow the terms of the employment contract, the email should be considered the employer’s “30 days written notice to terminate our Employment Services Agreement”. On August 12th, the employer sent the employee a third email to which it attached its first email and again listed its concerns with the employee’s performance.

The employee’s lawyer wrote to the employer on August 19th stating that the employee understood that his employment had been terminated. In September 2021, the employer responded to the lawyer’s letter stating that it did not intend to terminate the employee’s employment, and that it wanted to maintain the employment relationship under the terms of the parties’ contract. The employee ceased working for the employer in early September 2021, and later that month resumed work at a company he worked at prior to joining the employer.

Opposing Positions

The employee argued that his employment was terminated without cause by the employer and, therefore, he was entitled to be paid the balance of the remuneration owing to him for the remainder of the three-year term under his contract with the employer.

The employer argued that the employee either voluntarily resigned or abandoned his employment and, therefore, he was not entitled to an award of damages for wrongful dismissal.

Decision

The court noted that the province’s Court of Appeal established in Beggs v. Westport Foods Ltd., 2011 BCCA 76 that the following test must be applied to determine whether an employment relationship has been terminated through an employer’s dismissal of the employee or through the employee’s voluntary resignation:

the test…is a purely objective one, and the parties’ subjective understanding of the employer’s intention is not determinative. Simply put, there must be 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. Furthermore, evidence of surrounding circumstances may be considered in determining whether notice is clear and unequivocal. [emphasis added]

The court reviewed the communication between the parties in August and September 2021 and stated that having read it “collectively and objectively”, it was not persuaded that the employer “clearly and unequivocally” dismissed the employee from his employment.

While the court acknowledged that the August 11th email stated that it was to be considered “as our [the employer’s] 30 days written notice to terminate our Employment Service Agreement”, it emphasized that this email cannot be considered in isolation; it must be read along with the email sent the following day, which attached the earlier email of August 4th. The latter two emails set out specific concerns with the employee’s work performance and referred to the employer’s right to terminate the employee’s employment agreement for cause under a provision in the parties’ contract that stipulated that the employer may dismiss the employee for cause, provided that the employer gives written notice of a failure to abide by the terms of the contract and that failure is not then cured within 30 days.

The court agreed with the employee that the three emails were confusing. It interpreted the first and last emails as attempts by the employer to indicate that it had identified deficiencies with the employee’s work performance and was considering invoking the employer’s right to dismiss him for cause if, after 30 days’ formal notice was provided, the deficiencies were not cured. The court interpreted the second email as an attempt by the employer to indicate that it was now commencing a 30-day notice period in respect of the employee’s employment termination; however, the court was unable to determine whether the notice was being given for cause or not for cause.

The court emphasized, however, that this confusion was “dispelled” in September 2021 when the employee was sent communications stating that the employer did not intend to terminate the employee’s employment. In the court’s view, someone in the employee’s position having received the August and September 2021 communications could not reasonably conclude that their employment had been clearly terminated.

The court made a special point of stressing:

In particular, the August 11, 2021 email was not specific and unequivocal notice that [the employee’s] employment is to come to an end on a certain date in the future, particularly given the temporal proximity of the August 4 and 12, 2021 emails, which suggested otherwise. A reasonable response to such communication by an employee would have been to make further inquiries of the employer, as [the employee] effectively did through his lawyer’s letter of August 19, 2021. However, I find that it was not reasonable for [the employee] to then take the position that he was dismissed without cause by [the employer] in the face of the clear and unambiguous statements to the contrary sent to him by the company’s representatives in September 2021.

The court found that the employee effectively and voluntarily resigned by abandoning his employment with the employer in September 2021.

Bottom Line for Employers

Lumberwest Building Supplies cautions employers that if it is not their intention to terminate an employee, they should avoid engaging in a clear and unequivocal act that, objectively viewed, would be understood by a reasonable person to amount to the employee’s dismissal. Employers are encouraged to handle written and verbal communications with an employee regarding the state of their employment relationship, including communications regarding the possible termination of the employee’s employment, with great care.