Canada: What To Expect When You Expect To Retire, But Change Your Mind

What happened?

The employee worked as an auto glass installer from 2000 until 2012 when he left work for rotator cuff surgery.  At the time, he understood that he might be unable to work for as much as a year.  When he left work in December 2012, he was given a Christmas bonus and a Record of Employment stating that he was leaving for "Medical Reasons" and that he was "Not Returning".  The employee testified that when he left, he was hopeful that the surgery would be successful and that he would have his job to come back to.  However, he was also concerned that he might have to retire for medical reasons.  He claimed that he had never said he was retiring because he could not afford to retire and had no desire to retire at 59 years of age.

The employer, testified that he understood from the employee that he was retiring and that the employee had said he would not be able to do the kind of work he did in the future due to heavy lifting.  Other witnesses testified that they had been told by the employee that he was retiring.

About two months after surgery, the employee and his wife were buying a cottage and needed to arrange bank financing.  The bank requested a letter confirming that the complainant was employed and the employee's wife requested the letter.  The employer declined saying that the employee had permanently left and no longer had a job.  The employee's wife testified that she was "shocked".  The employee testified similarly.  Sometime around this time, the employee had a close look at the Record of Employment and noticed that it said he was not returning.  He claimed that he spoke to the employer about this, but the employer testified that he did not recall having such a conversation with him.

In early April, the employee brought a complaint to Labour Standards where a Labour Standards Officer found that the employee was unjustly dismissed pursuant to Section 71 of the Nova Scotia Labour Standards Code (the Code).

What did the Labour Board do?

The Labour Board allowed the employer's appeal saying that the complainant had expressed an intention to retire due to poor health and had voluntarily left his employment.  The Board set out the legal test from an earlier decision that said:

In other words, whether objectively speaking, an intention to resign was communicated by the employee.  The Board then considered whether the complainant objectively communicated his intention to retire from employment in the days leading up to his departure from work.  The following findings of fact were found:

• The employer's witnesses unanimously understood from the employee's own statements that he was retiring for medical reasons.
• The statements about retiring were not old, general statements about a likely future retirement date, but were statements about what the employee was doing in the coming days including one statement to a co-worker that he would still "drop in from time to time" not simply words saying he was hoping to be back at work, when recovered.
• The consistent message the employee was sending to people in the workplace was that he was leaving his employment for medical reasons and that he did not want, or would not be able to, do this type of work again.
• The surgery went well – this likely caused the employee to rethink his situation, but unfortunately, this process of undoing involved a bit of "rewriting history".

In light of this, the Board found that the employee voluntarily left his employment with the intention of retiring and was not dismissed or entitled to relief under s. 71(1) of the Code.  In addition, the employee had not asked the employer to hold his job for him, but said:

In future cases, Labour Standards Officers and the Labour Board dealing with cases of medical leave ought to have a second look at the problem through this lens of reasonable accommodation and undue hardship.  The application of human rights principles is not the exclusive domain of specialized human rights bodies.  Human rights do not sit outside the door to a labour or employment hearing.

In the unionized context, it has been held by the Supreme Court of Canada that human rights laws are 'incorporated into each collective agreement over which an arbitrator has jurisdiction,' and as such, the arbitrator has a duty to take human rights considerations into account:  see Parry Sound (District) Welfare Administration Board v. O.P.S.E.U., Local 324 [2003] S.C.J. No. 42.  By the same token, I believe it can be said that human rights laws are incorporated into the individual contract of employment between employees and employers, and any tribunal or officer with jurisdiction over that employment would be obliged to take those rights and obligations into consideration.

The Labour Standards Officer found that the employee was entitled to eight weeks' pay in lieu of notice under the Code, plus 14 months' pay in lieu of reasonable notice, as remedy for wrongful termination.  The Board found that "notice is notice" and there was no basis to add the two together as eight weeks under the Code would overlap with common law notice.  Further, if there had been a wrongful termination, what the Officer had awarded was in excess of what would have been available to the employee.  Saying that the employment had lasted just over 13 years, and that the one month per year "rule" was generally reserved for employees in management positions or who were highly skilled and highly paid, the Board said that the employee's common law notice would be considerably lower.  In this case, the Board said, although his advanced age was a factor tending to call for a higher notice period, the Board would have assessed reasonable notice at eight months less mitigation earnings.

What are the takeaways?

• The "quit" v. "fired" test is whether the employee objectively communicated an intention to resign to the employer.
• The Board also said that human rights laws are incorporated into individual contracts of employment between the parties and that any tribunal or officer with jurisdiction over that employment is obliged to take those rights and obligations into consideration.
• The "month per year" rule is reserved to employees with management functions or highly skilled and highly paid employees – at least insofar as this Board was concerned.  Employees below those levels are not likely to attract a "month per year" assessment of notice.  In this case, the employee had worked for 13 years and was almost 60-years old when he left work.  As a result, his age tended to call for a higher notice period in accordance with the traditional Bardal reasonable notice factors, but even then, the Board said, his notice entitlement was eight months.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.