Canadian Employment Law Today

Canadian HR Reporter, 2019 Resignation and rehire not continuous employment Ontario employee who resigned, was later rehired and then dismissed by the same employer was not entitled to notice based on entire length of ser vice: court BY RONALD MINKEN A n employee's resignation may impact the length of notice she receives if the employee is re- hired by the same employer. e Ontario Court of Appeal considered the effect of an employee's resignation and re-employment by the same employer in a wrongful dismissal case. Jasmine eberge-Lindsay began work- ing in Dr. Kutcher's dental practice in Stoney Creek, Ont., as a hygienist in 1993. Kutcher restructured his practice in vari- ous ways in the succeeding years; accord- ingly, the respondent was required to sign a series of employment agreements starting in 1999 until 2011, all of which limited her notice of dismissal entitlement to the mini - mum required by Ontario's Employment Standards Act, 2000 (ESA). By correspondence dated March 28, 2005, eberge-Lindsay tendered her res- ignation effective July 7. She was engaged to a man who lived in Guelph, Ont. and had secured employment there. However, during the notice period and prior to her effective day of resignation of July 7, eberge-Lindsay ended her engage - ment and advised Kutcher of her intention to remain employed at his office. On June 30, 2005, eberge-Lindsay was presented with and subsequently signed an employment agreement so that she could be rehired on July 1. e employment agree - ment limited the dental practice's liabil- ity should it terminate her without cause to notice or payment in lieu of notice in ac- cordance with the ESA. eberge-Lindsay's employment was continuous as she never did leave her employment with Kutcher despite her prior resignation and Kutcher didn't issue a record of employment. In Feburary 2006, Kutcher wrote a letter stating that eberge-Lindsay had worked in his office since 1993 to help eberge- Lindsay get financing. In December 2012, Kutcher terminated eberge-Lindsay's employment without cause. She was given one week's salary as the ESA minimum in accordance with a 2011 employment agreement that had been reached following restructuring of the practice. e trial court e trial judge held that eberge-Lind- say was wrongfully dismissed and as- sessed common law damages in lieu of reasonable notice at 15 months. "In my view, none of the three employ- ment contracts signed by (eberge-Lind- say) are enforceable," the trial judge said. "Each of the contracts fail respectively for lack of consideration… (eberge-Lindsay) received no more from signing each of the three agreements but for continued em - ployment." e trial judge also found that Kutcher had accepted eberge-Linday's retraction of her resignation and it had no impact on her continuity of service with the den - tal practice, noting that in February 2006 Kutcher was prepared to recognize the continuity of eberge-Lindsay's employ- ment with his practice since 1993. Regarding the effects of the 2005 resig- nation, the trial judge held: "(eberge-Lindsay's) resignation was re- scinded well prior to July 7, 2005. e evi- dence demonstrates that (she) was happy to remain employed with the practice of Dr. Kutcher and Dr. Kutcher was happy that she was to do so. (eberge-Lindsay) continued with her responsibilities for the practice consistently and without interruption after March 28, 2005. Dr. Kutcher's efforts to re - place the plaintiff were brief and uncostly." e Ontario Court of Appeal Kutcher appealed to the Ontario Court of Appeal, arguing that the trial judge had failed to properly consider eberge-Lind- say's resignation, specifically that "the 2005 resignation broke the chain of eberge- Lindsay's employment since 1993. She was required on June 30, 2005 to sign a new em - ployment agreement in order to be re-hired on July 1, 2005. Consequently she [was], at best, entitled to the Employment Standards Act, 2000 minimum notice measured from the date that she was re-hired in 2005." e Court of Appeal agreed. In a brief de - cision, the court held that eberge-Lind- say's "unequivocal resignation and re-hiring in 2005 marked a break in the employment relationship, after which an entirely new contract was reached between her and (Dr. Kutcher). ere was consideration for that new employment: the respondent ex - pressed her desire to again be employed by the appellant, and he agreed to employ her." e appeal court held that Kutcher could rely on the 2005 employment agree - ment with its ESA termination clause and awarded eberge-Lindsay 7.5 weeks' sal- ary at $1,204 per week, less the $1,200 al- ready paid. Other employment agreements invalid Kutcher restructured his dental practice multiple times to minimize taxes and split income with his wife after eberge- Lindsay began working for him in 1993. As a result, he had eberge-Lindsay sign a series of employment agreements limiting her notice upon termination of employment to ESA only. Even though the respondent was paid by Kutcher per- sonally, from different corporations and at different times, it was always Kutcher who signed the cheques. Despite his at- tempt to limit the notice through the use of employment agreements, the trial court found that none of the agreements was enforceable due to a lack of consid- eration. e Court of Appeal agreed with the trial court's decision that the employ- ment agreements were not binding, ex- cept for the 2005 agreement, in which the only consideration was the respondent's offer to be re-employed and Kutcher's ac- ceptance of that offer. It is unusual that Kutcher would go to such efforts and ex- pense of restructuring his practice and having new employment agreements prepared without considering what is proper monetary consideration to make all the agreements valid and enforceable. Had Kutcher provided additional mon- etary consideration for each agreement, the remaining employment agreements EMPLOYERS must recognize an employee's full term of service when providing reasonable notice of termination, unless there is a significant interruption in that service. But as one recent Ontario case shows, the notice entitlement can be less if the employee resigned at one point — even if the employee never actually left. 4 CASE IN POINT: REASONABLE NOTICE BACKGROUND

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