'The character of the employment was heavily considered by the court in this case'
A B.C. hotel worker with 32 years of service who was laid off and then terminated during the pandemic is entitled to 18 months’ notice, the B.C. Supreme Court has ruled.
The nature of the worker’s job and the fact that he found a new job almost immediately factored into the court’s decision to award a notice period less than the accepted 24-month maximum, says Jessica Gibson, an employment lawyer at Ascent Employment Law in Vancouver.
“The character of the employment was heavily considered by the court in this case, and it did seem to have a direct impact on [the worker’s] ability to find new employment when he applied and got a job almost immediately,” says Gibson.
“The general nature of his position, I think, was looked at pretty closely – but then the court commented that just because somebody found employment quickly, we wouldn't want to assess just based on the character of the employment, because then that could potentially remove a notice period altogether.”
Benefits continue during layoff
The 58-year-old worker was hired in 1988 as a houseperson at the Pan Pacific Hotel in Vancouver – a luxury resort catering primarily to corporate clientele. The houseperson position supported housekeeping and other departments within the hotel, filling in for various duties.
The worker was classified as a regular hourly employee – not guaranteed hours but receiving work when it was available. As he built up seniority, he worked near full-time hours.
When the COVID-19 pandemic reached Canada in March 2020, the hotel’s business dropped sharply. As a result, on March 27, the hotel cancelled all hours for hourly employees and laid off some salaried employees. In June, salaried employees were given the option of working two to three days per week to remain employed, which they all accepted.
The worker received the Canadian Emergency Response Benefit (CERB) between mid-March and late September 2020.
On June 28, the hotel decided to terminate 48 hourly employees with the lowest seniority while continuing the employment of about 150 regular hourly employees including the worker, to keep them on the extended benefit plan and avoid having to pay them severance.
Gibson says that extending the benefits was a good move by the hotel during a difficult time, despite the fact that it helped avoid having to pay severance at the time.
“It is a way to mask providing severance, but at the end of the day it’s helpful, especially during the time of the pandemic,” she says. “I like to give people the benefit of the doubt, and people were doing their best in unusual circumstances – there wasn't a lot of hours for employees to work, so even if [the worker] hadn't been laid off, the extension of health benefits was definitely a good thing.”
“If an employer is financially able to do that, that’s great,” adds Gibson.
Read more: The layoff extension of a B.C. travel agency worker was not a termination because the worker agreed to it, the B.C. Supreme Court ruled.
The B.C. government passed legislation allowing for temporary layoffs to be extended to Aug. 30. After that date, employers had to apply for a variance to continue the layoffs.
In July, the hotel made a proposal for each of the 150 hourly employees to accept a casual position but keep their seniority and pay grade. Many employees accepted the offer, but the worker did not.
Termination backdated
On Dec. 9, the hotel informed the remaining hourly employees, including the worker, that its benefits provider would not extend coverage to inactive employees past Jan. 1, 2021, and this would result in the termination of their employment – which would backdate to Aug. 30, the legislative maximum for temporary layoffs. The hotel said that it would pay the minimum termination pay entitlement for a without-cause termination.
The worker found a new job at a care home on Nov. 30 as a casual employee earning less than his hotel wage and with fewer hours.
The worker sued the hotel for wrongful dismissal, claiming 24 months’ pay in lieu of notice. He also claimed punitive and aggravated damages for what he called “strong-arm tactics” to try to get him to discontinue his claim. In November 2021, the hotel offered the worker a janitorial position with a related company in an office tower beside the hotel, if he dropped his lawsuit. The worker declined and suggested this was an act of bad faith, particularly since the hotel withdrew the offer two days later.
The hotel argued that the worker was entitled to a shorter notice period because, had he remained employed, he would have received few shifts during the pandemic – in fact, there were no shifts for housepersons at the hotel until June 2021.
Wrongful dismissal damages decreased
The court found that that the worker’s responsibilities were modest and similar to entry-level workers, which jobs were usually easier to find. However, the worker’s age and 32 years of service raised the possibility that it would be harder to find similar employment – the worker found a care home position soon after he started looking for work, but it didn’t replace his position at the hotel, said the court.
The fact that the worker was able to look for work while he was on layoff, which helped him find new work quickly, may have found its way into the court’s calculation of the notice period, but the character of employment and transferable skills were likely the biggest factors, says Gibson.
“Notice periods are supposed to help a person transition from one employment to another, even if they are employed, so obviously no notice period would have been unacceptable,” says Gibson. “But the fact that [the worker] was able to find new employment so quickly [reduced the notice period] – it wasn't completely comparable, but he was able to find another job.”
Read more: An Ontario court awarded a dismissed Air Canada senior management employee with 24 years of service 24 months’ pay, benefits, and bonus totalling more than $500,000.
The court noted that, although the worker’s hours were usually close to full-time, he was an hourly employee whose work depended on the needs of the hotel. The pandemic reduced those needs and the fact that the worker found alternate employment before receiving his termination notice indicated his expectations of work at the hotel going forward.
The court determined that the worker was entitled to 18 months’ pay in lieu of notice. The court also found that CERB payments should be deducted – agreeing with previous decisions that CERB was a benefit providing indemnity for the loss of regular salary arising from wrongful dismissal that the worker didn’t pay into – but only four weeks’ worth that he received after the termination date of Aug. 30, 2020, when there was an overlap with the notice period.
Job offer not bad faith
The court characterized the janitorial job offer as a “real offer to settle the action,” which the worker was free to accept or reject. There was no basis to find bad faith in the hotel’s conduct in making the offer, said the court.
Although the worker claimed the job offer in November 2021 was in bad faith, Gibson agrees that it was a reasonable move for the hotel.
“There was some talk it wasn't a genuine offer because it eventually was revoked, but the court assessed that it was a genuine offer,” says Gibson. “And I think in this case, that was the right thing to do – that's a great way to potentially resolve litigation and would set [the worker] up with a more comparable position than he went to from the hotel.”
“That's definitely something that was a good thing to do on the side of the employer.”
The hotel was ordered to pay the worker 18 months’ pay in lieu of notice, minus the amount of severance pay already paid, his income from his care home job during the notice period, and four weeks of CERB payments.
Takeaways for employers
Gibson sees two key takeaways for employers from the decision – the importance of understanding legislation relating to layoffs and terminations, and employment contracts that can limit common law notice.
“My big takeaway from this was the importance of having a valid contract and employment agreement that details an employee's role within the company, that should be altered when the employee's position changes, and which also addresses notice and severance,” she says.
“Specifically, an employment agreement that will address how an employee would be dismissed without cause, what the notice would be, and what severance would be.”
“And, obviously, employers need to know that you cannot contract below anything set out in the Employment Standards Act, or else the termination provision becomes void. That might be well known to readers, but that's something that I deal with almost on a weekly basis.”
See Nicolas Jr. v. Ocean Pacific Hotels Ltd., 2022 B.C.SC 1052.