In Hetherington v Saskatchewan Liquor and Gaming Authority, 2020 SKQB 110, the Queen’s Bench for Saskatchewan considered the impact of an employee’s voluntary interruption of employment on her entitlement to common law reasonable notice following her wrongful dismissal without cause. The primary question before the court was whether the employee’s notice period should be calculated solely on her most recent years of service, or on the totality of her years of service.

The employee was dismissed without cause when her position as a Director with the Saskatchewan Liquor and Gaming Authority (SLGA), a Crown corporation, became redundant due to a privatization. Although she served in this particular position for nine years, she had 28 total years of service with the Government of Saskatchewan (Government), interrupted for 29 months when she voluntarily left her Government job before taking the position with the SLGA. The contract of employment was not determinative of the issue.

Decision of the Court

In its decision, the court summarized principles emerging from the case law on the effect of an interruption in employment on a re-hired employee’s severance calculation, paraphrased below:

For the following reasons, the court concluded that the employee’s prior Government service would be taken into account in assessing her severance entitlement:

In addition, the court emphasized that despite the break in the employee’s service, the SLGA effectively treated her as a long-term employee with the Government except when it came to paying her severance after her job was abolished. The court cited the following evidence of such treatment:

The court also noted the employee’s:

…break in service was relatively short when compared to the totality of her employment with the Government of Saskatchewan – 29 months of the approximately 28 years of service or 7.86% of the time. Accordingly, it would, in my view, be unreasonable and illogical to ignore her previous years of service with the government when assessing her severance entitlement. (para. 91)

Applying the factors set out in Bardal v Globe& Mail Ltd. (1960), 24 DLR (2d) 140 (Ont H C) (length of service, age, character of employment, employee’s experience, training, and qualifications, and availability of alternate employment), to the employee’s circumstances, the court concluded that the reasonable notice period was 17 months: 5 months of working notice and 12 months damages in lieu. In arriving at this decision, the court noted: the employee served for 28 years; she was 65 years old; she held a senior management role; she had exceptional credentials and was highly qualified; and, as a career civil servant with little, if any, private sector experience, her prospects for finding alternate comparable employment were minimal, if not non-existent.

Bottom Line for Employers

To ensure that an employment agreement does not leave an employer vulnerable to liability for common law reasonable notice based on prior service, employers should seek the advice of experienced employment counsel to draft appropriate termination clauses. 

Employers are encouraged to take proactive steps to protect against any requirement to recognize a re-hired employee’s prior service upon termination without cause. To improve the likelihood of this outcome, an employer should ensure that the employment agreement entered upon rehiring specifically addresses the interruption of employment with these express terms:

If the employment agreement does not contain such express contractual terms, employers are encouraged to avoid treating a rehired employee as a long-term employee with respect to salary, vacation, pension benefits, long service awards, and other employment entitlements.

This content was originally published here.