Employer owes nearly $350,000 after wrongful dismissal
“When you have a senior employee who goes on disability leave, have a strategy for how you're going to deal with and manage that disability leave - what are you going to do operationally to fill that position and what are you going to do to get them back to work.”
So says labour and employment lawyer Kit McGuinness of McKercher LLP in Saskatoon, after a Saskatchewan court found that an employer claiming that a worker resigned actually terminated him without cause while he was off work and owes him nearly $350,000.
The 48-year-old worker was a heavy-duty mechanic for Korpan Tractor and Parts, a heavy equipment sales and rental company in Saskatoon. Korpan hired him in 1996 and he moved up the ranks, achieving the position of service manager of the company’s repair shop. He supervised about 15 people and was responsible for hiring new mechanics and invoicing repair projects.
After the COVID-19 pandemic arrived, the status of the company’s rental fleet was a concern. The pandemic forced the worker to lay off half of his workforce, which took a toll on him as he regarded many as friends.
The worker’s father passed away early in the pandemic, which added to his mental burden. On one occasion, the worker broke down in his office and the owners told him to take the rest of the week off. The worker went on short-term disability for seven weeks.
Abusive behaviour in meeting
The owners called an unscheduled meeting on July 15, 2020, with the worker, the shop foreman, and a senior manager. The worker was late because he was with a customer at the scheduled start time. As he approached the boardroom, he heard yelling with profanity. One of the owners was yelling at the senior manager about equipment repair. Eventually, the senior manager said that if the owner didn’t stop yelling, he would resign. The yelling continued, so the senior manager said, “I’m done” and walked out.
The owner turned to the worker and started yelling at him. Taken aback, the worker said, “I am also done” and walked out of the boardroom.
The owners were surprised that both managers quit and walked away, and they agreed that they needed the worker in his service manager role. The other owner went to the worker’s office and apologized for the other’s conduct, saying “Don’t throw your career away… we have your back and we want you to get better.”
The worker rescinded his resignation and they understood that things would stay the same as they were before the meeting. The worker went home and both owners sent him text messages reassuring him that his job was secure and they wanted him to “take a break and get better, we want you to be happy and healthy not stressed.” The owner who had yelled at him also texted an apology for his “unprofessional” behaviour.
A couple of days later, the owners called a meeting with service department employees and advised them that the worker hadn’t resigned but needed some time off for his health.
Short-term disability
The worker then focused on addressing his health challenges, going on short-term disability leave. However, he was denied long-term disability benefits by the third-party benefits provider, which advised that Korpan had reported no decline in his ability to perform his job duties leading up to his last day at work, so there was no indication of an illness that interfered with his ability to perform his occupational duties.
The worker remained off work since the July 15 meeting. One of the owners texted him on Sept. 21 saying he was checking in to see how he was doing and to let him know if he had some time to chat. However, the worker’s medical issues continued to worsen – he would eventually need surgery to remove a tumour in his head in 2021 and ear surgery in 2023. He also had a back problem from his mechanic work that required surgery.
On Nov. 24, Korpan sent the worker letter stating that the company accepted his verbal resignation at the meeting. The company asked him to return all company property, including his company cellphone, and invited him to pick up his personal items or it would arrange to have them delivered.
The worker sued for wrongful dismissal, claiming that he didn’t resign. Korpan maintained that it didn’t terminate the worker, but rather he resigned at the July 15 meeting, which it accepted in November 2020, and he didn’t rescind his resignation after the meeting.
Korpan’s first misstep was in allowing verbal abuse in the July 15 meeting, says McGuinness.
“Meetings should be conducted in a professional manner and make sure someone is taking notes that can be relied upon later about what happened in the meeting, in case there is ever discrepancy over what was said,” he says, noting that the company did act appropriately when it tried to smooth things over in the aftermath of the meeting with an apology and supportive messages.
“It wasn't perfect, but I think [Korpan] did reasonably well in the first month or two,” he says. “But when they decided to terminate [the worker] out of the blue and impact his ability to continue claiming disability benefits, it was clearly a misstep.”
No resignation
The court found that the worker didn’t resign during the July 15 meeting, noting that Korpan told other staff that the worker required time off for health reasons and expected his eventual return. In addition, the worker claimed that he had rescinded his resignation after the meeting and the messages sent by the owners afterwards indicated that they still considered him an employee while he took time off, the court said.
The court also found that the evidence indicated that, from July to November 2020, the worker was focused on stabilizing his mental health and medical treatment – of which the owners were aware. The court also once again pointed to the conduct of the owners, which indicated that they still viewed the worker as an employee who was off work for medical reasons. In fact, at the hearing, one of the owners admitted that they had still considered him an employee after the meeting.
“Based on the employer's own evidence, it didn't see [the worker] as having resigned his employment - it seems like a convenient defense: ‘In the meeting he said he quit, so let's try to get out from underneath a potentially hot damages award by saying we didn't fire you,’” says McGuinness. “If that was actually the case, they never would have sent those text messages saying ‘We hope you're well, we’re looking forward to you coming back,” and they never would have sent that letter - to accept that [the worker] resigned his employment requires ignoring some very important evidence from the employer's own conduct.”
The court also found that the termination was effectively executed through Korpan’s actions, including its refusal to support the worker’s long-term disability claim and the letter stating that it accepted his resignation.
Lack of communication
The lack of communication with the worker before sending the letter was a big misstep by Korpan, says McGuinness.
“There should have been some dialogue over expectations over when he was coming back to work,” he says. “It seems like there was a real gap between the text message in September saying ‘We hope you're well’ and the letter in November, which was essentially a termination letter.”
The court determined that the worker was entitled to 24 months’ notice, considering his 24 years of service, senior managerial role, and age of 48 at the time of termination. The damages were calculated at $355,450.44, with a deduction of $7,000 for short-term disability payments the worker received.
Korpan’s argument that the worker failed to mitigate his damages by seeking other employment was dismissed, as the court accepted the worker’s evidence that ongoing mental and physical health challenges rendered him unfit to work.
The worker claimed moral damages based on alleged intentional infliction of mental suffering from the verbal abuse by the owner and the termination, but the court found no evidence of malicious intent by the company, noting their supportive communications after the meeting.
Sometimes employers aren’t sure how to handle an employee who’s been on the shelf for a while, but there are options, according to McGuinness.
“They could have asked for medical evidence about a potential return to work and they could have asked questions about potential accommodations,” he says. “Rather than engaging with that, they just simply jumped to, ‘We accept your resignation.’”
“It seems to me that with the lack of a plan to some extent, [Korpan] was the author of its own misfortune,” says McGuinness. “They wrote a letter that was completely inconsistent with the evidence was over whether or not there was actually a resignation and whether they considered it a resignation.”
See Denton v. Parriwi Management Inc., 2024 SKKB 216.
