Accepting another job during layoff does not constitute resignation: court

In yet another decision arising out of COVID-19 fallout, the Ontario Small Claims Court reaffirmed for employers that an employee finding another job while on a temporary layoff does not constitute a resignation.

The decision involved employee Michelle Hurlbut, who successfully claimed wrongful dismissal against her former employer, funeral home operator Low & Low Limited.

Hurlbut was wrongfully dismissed, the court decided, because the employer failed to pick up on “signals” from her that the job she secured while laid off was “just a temporary attempt to bridge her financial needs until she was recalled” after the pandemic.

Miscommunication led to wrongful dismissal

Hurlbut was employed as a full-time funeral director at Low & Low when she and the owner, John Low, decided a temporary layoff would be mutually beneficial during the early stages of COVID-19, since she expressed a need to care for her children at home.

Several months later when her financial situation became “dire”, she secured a maternity leave contract at Praxair, another firm. Low was “blindsided” by the news she had taken another job, he told the court, and this is likely what caused his mistake, says Ioana Pantis, employment lawyer at McMillan in Toronto.

“The employer made an emotionally driven decision and not a legally informed decision,” Pantis says.

“Employers should not rely on employee actions or verbal statements alone for a resignation, but they should inquire in writing whether the employee intends to resign, and then accept the resignation in writing.”

When Low was called for references for Hurlbut’s new job, he assumed that meant she was not returning to work for him, even though she had sent him an email stating:

“I've tried to call a couple of times to speak with you about this, but I haven't had much luck getting a hold of you.

“I've had to take a temporary job to get through all of this covid crap. Times are tough right now·. I'm hoping that when things blow over and restrictions are dropped that I can return to Low's.”

The two had also had informal discussions in the earlier part of the pandemic in which it was implied Hurlbut would return after the pandemic ended.

“Having the written communication was key in this decision,” says Pantis.

“The judge really sided with that, because the employee’s email clearly said she took a temporary job and hoped to return to work when COVID restrictions blew over.”

Pantis did point out that even without that email, the judge would still likely have decided in favour of Hurlbut.

“If we didn't have that communication, then the judge would only be left with each person's oral testimony about what they said and what they intended, and in that case, the employer would still have a hard time arguing its case because judges tend to be employee friendly.”

Length of employment a factor in wrongful dismissal

Low told the court his assumption was further confirmed when Hurlbut asked to come to the office to retrieve her things, including her funeral director’s licence. But she attested that was only after he had issued her an ROE.

Hurlbut was employed with Low & Low for 15 months, a fact which saved the employer having to pay more in damages, plus she had mitigated some of those costs with her employment at Praxair.

“When there's ambiguity and the resignation isn't absolutely clear, then the employer could be on the hook for a wrongful dismissal or common law reasonable notice damages, which typically are higher for longer service employees,” says Pantis.

The judge awarded Hurlbut wrongful dismissal damages amounting to $2,750 for lack of proper procedure in handling her layoff and supposed resignation.

In his decision, the judge chalked this incident up to the “pandemic’s negative impacts”, calling both parties “salt-of-the-earth type individuals” whom he believed had respect for each other prior to the circumstances of the layoff.

“The Covid pandemic stretched a lot of people and relationships to the maximum, and unfortunately these parties were not immune to the pandemic’s negative impacts,” the judge wrote.

Moral and punitive damages claims were denied, as the judge explained that he believes Low had good intentions when he issued the ROE.  

“I don’t believe for a minute that Mr. Low acted callously or in a manner that needs sanction from the court,” he wrote.

“I am satisfied that since the Plaintiff had a full-time job at the time, Mr. Low didn’t have it in his mind that he was making things difficult or intolerable for the Plaintiff: put another way, he wasn’t attempting to leave the Plaintiff out to dry. I appreciate that the Plaintiff may have taken it that way, but it was not, in my view, Mr. Low’s intention.”

Multiple job policies should be clearly contracted

This decision highlights the importance of regular communication with employees on leave, says Pantis, and clear language in employment contracts that outline limits around working multiple jobs, as the judge did take this opportunity to re-iterate that employees are within their rights to have more than one job.

“There's no legal reason why an employee can't have multiple jobs, but it's only if the employer actually has a contractual provision prohibiting multiple jobs, that that could potentially constitute just cause for termination,” says Pantis.

Even if an employee’s performance is affected by working another job, or even multiple jobs, it would be an “uphill battle” for an employer to find cause for termination, she adds; even with employee monitoring technology available, with various provincial privacy statutes in place, it remains a difficult task to prove an employee is slacking on their duties.

“It's a fine line of when an employer can monitor an employee and when they can't in Ontario, and what's reasonable versus what's not reasonable. That really should be assessed on a case-by-case basis with legal advice.”