Years of service before hiatus did not count towards employee’s years of service

A recent decision from the BC Supreme Court highlights how a hiatus from working with an employer may impact an employee’s entitlement to notice or pay in lieu thereof upon termination.

Facts

In Shultz v. Prococious Technology Inc., 2022 BCSC 1420, the plaintiff employee had a long-term association with the defendant employer in various capacities, as an independent contractor from 2006 to 2011, and as a technical sales employee from 2011 to February 2018 when she resigned. In April 2019, the employee started to work for the employer as a sales engineer, pursuant to a new written contract.  In March 2021, the employee received a promotion to sales manager and signed a new employment contract, which limited her entitlement to notice or pay in lieu thereof to the minimum amounts required by the Employment Standards Act. The new contract did not contain an express term that recognized her previous employment with the employer before 2019.

The employee was terminated without cause in January 2022. She subsequently sued the employer for wrongful dismissal. She sought 14.5 months earnings, arguing that the termination clause was not enforceable and that her previous employment with the company should be included when calculating her length of service. In addition, the employee sought aggravated damages for the manner of her dismissal and compensation for bonuses that she would have been paid.

Decision

At trial, the Court found there was no express term or conduct that recognized the employee’s previous employment with the employer, and that the probation period and reset vacation entitlement in the new contract indicated that she was treated as a new employee when she was re-hired. Therefore her period of employment calculated from when she returned to the employer in April 2019 was two years and nine months (not 14.5 years). The court also found that the employer’s conduct in terminating the employee’s employment did not rise to the level required to support a claim of aggravated damages as the employer was not unduly sensitive and the anxiety suffered by the employee was normal for someone who had been terminated and had to search for alternative employment. The Court also found the employee was entitled to a bonus that was earned during the last few months of her employment.

Takeaways

This case provides a helpful illustration of what can happen if a returning employee’s previous service with an employer is not addressed in a contract. If an employer would like to acknowledge an employee’s previous service (for the purpose of calculating their entitlement to notice) then it should address that point clearly in the contract. Conversely, if an employer does not wish to acknowledge prior years of service, that should also be made clear in the employment contract, but employers cannot provide less than required by the Employment Standards Act.

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