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Employee’s treatment for drug addiction/fragile health factored into calculation of reasonable notice period

In Pereira v. The Business Depot Ltd., 2009 BCSC 1178, the court factored in the employee's recent release from a drug addiction treatment centre, and his vulnerable state of health generally, in determining the reasonable notice period.

Background  

The employee started working at Staples in 1997, after being recruited from another company. He was eventually promoted to general manager of the Nanaimo location.

Prior to June 2003, he was regarded as a good performer. However, starting at this time his professional conduct took a dramatic turn, as was repeatedly late for work, sometimes would not show up at all or would leave mid day for extended periods.  The employee eventually advised his district manager that he was depressed, fatigued and very unwell.

Shortly thereafter, he went on a medical leave and then went on short term disability ("STD") for depression and drug addiction.  He came back to work briefly on a Graduated Return to Work Program ("GRTW") in November 2003 but, after doing well initially, matters had deteriorated by the end of December 2003.

The employee then went on a second medical leave, first receiving STD benefits and then long-term disability ("LTD") benefits.  The employer's evidence was that it had difficulty obtaining the necessary medical documentation from the employee during this time or confirmation that he was unable to be at work, and had written at least three letters to him in this regard.

As a condition of maintaining his LTD benefits, the employee was required to enter into a treatment facility. The insurer would not, however, pay for the treatment.

After securing the necessary funds, the employee entered a treatment facility in Kelowna in August 2004. 

Post-Treatment

While his he was in the treatment facility, as well as in the days immediately following his release, the employee indicated to both the employer and the insurer that he intended to return to Nanaimo and hopefully return to work. However, no specific time frame was established in these communications for the employee's return to work.

As soon as he was released from the facility on September 7, 2004, the employee made his way to a friend's house in Kamloops where he thought a disability cheque was waiting for him. He needed the money to travel back to Nanaimo.  The cheque was not there, however, as it had been inadvertently sent to the employer's head office on Ontario.

In the ten or so days after he was released from the treatment facility, the employee was in contact with the insurer and/or the employer on several occasions in relation to the missing cheque.  It was the employer's evidence at trial that based on these communications, as well as others, it expected the employee to meet with it on September 14, 2004 and return to work no later than September 21, 2004

The cheque finally arrived in Kamloops on September 17, 2004 and the employee returned to Nanaimo the next day. From that time forward, he did not make any effort to contact either the employer or the insurer, as he was busy "settling" back into Nanaimo, including finding a new place to live.

The employee first learned that he was no longer with the company through an informal conversation he had with another employee on September 30, 2004.  Two days earlier, on September 28, 2004, the employer sent the employee a letter advising the employee that in their view he had abandoned his position, but the employee did not receive the letter until October 22, 2004.

The day before the employer sent its letter, the insurer had also sent a letter advising the employee that his LTD benefits were being terminated, but the employee also did not receive that letter for several weeks.  

Almost immediately after learning that he his employment had been terminated, the employee relapsed and within a month or two, had returned to Prince George, became homeless and then lived in a shelter for several months before obtaining further treatment.  In total, he was jobless for approximately two years and made no real effort to secure employment during this time.

Law on Abandonment of Employment

In response to the employee's filed a wrongful dismissal lawsuit, the employer argued that the employee had in fact resigned by abandoning his employment.

In relation to this argument, the court noted that:

...It is an implied term of every employment contract that an employee attend at work, and that he is only excused from that obligation where he has the employer's permission or is unable to report for work. Abandonment occurs where that implied term is breached by the employee. Abandonment demonstrates an intention to no longer be bound by the employment contract and therefore constitutes a repudiation of the employment contract by the employee. The employer is then entitled to accept that repudiation and treat the contract as being at an end.

The court also adopted the test that had been set out by the court in Koos v. A & A Contract Custom Brokers Ltd., 2009 BCSC 563, in which it stated:

 ...In a case of alleged resignation the test is whether a reasonable person would have understood by the plaintiff's statements and actions that he or she had resigned... The test is an objective one... However, to be effective, the resignation must be clear and unequivocal. There must be a clear statement of an intention to resign, or conduct from which that intention would clearly appear...

Application of law on abandonment of employment to the facts

The court concluded that the employer's position that the employee had abandoned his employment was premised on two distinct factors:

  1. Based on the communications with the employee and the insurer just prior to his release from the treatment facility and in the week or so thereafter, the employer had expected the employee to show up for work on or before September 21, 2004, and he did not;
  2. The employer's internal, but unwritten policy, was that if an employee was absent from work for three days without excuse they were deemed to have abandoned their employment.

Failure to show up for work

In relation to the first factor, the court concluded that it should have been crystal clear to the employer as of September 16, 2004 that the employee would not be starting work back in Nanaimo on or before September 21, 2004 because, among other things:

  • The employee had clearly stated while in treatment and in the days following his release that he intended to return work. However, no specific time frame had ever been established by the parties for the employee's return to work. As such, the employee was unaware in the first week or two of September of any expectation of a specific return date.
  • The employee's initial plans to return to Nanaimo had been disrupted by the missing cheque. The employer knew that the employee would likely be short of funds and would thus need the cheque in order to return to Nanaimo. Further, the employer had never communicated to the employee that waiting for the cheque in Kamloops was unacceptable.
  • The insurer had specifically advised the employee to not contact the employer until he had first met with the insurer's rehab consultant.
  • The insurer expressly told the employee that he would be expected to return to work within one or two weeks of returning to Nanaimo.

Failure to contact the employer

In relation to the second factor, the court found that the employee's failure to contact either the employer or the insurer in the week following his arrival in Nanaimo was reasonable given that it was the employee's reasonable understanding that:

  • he would not be contacting the insurer until he was "set up" or "settled" in Nanaimo, and that he had told the employer and the insurer that there were a number of things he would have to do immediately on returning to Nanaimo, such as finding housing, contacting Narcotics Anonymous, etc.; and
  • before returning to work, he would first be establishing a return-to-work plan with the rehab specialist and that the acceptability of any such plan had to be confirmed by his physician.

In relation to the second factor, the court further found that:

  • the employee had been in the process of doing exactly what he said he would do on his return to Nanaimo, as far as getting set up or settled. 
  • there was no basis upon which the employee ought to have known that he was expected at the employer's store on September 21, 2004, and consequently there was no basis for him to believe that he was required to contact the employer to explain his absence.
  • despite the fact that a number of communications had occurred the previous week between the employer and the employee by email, the employer did not make any attempt to contact the employee by email after he returned to Nanaimo.

In sum, the court concluded that the employee's expressed hope or intention to return to work was "clear and consistent" and at odds with the employer's contentions. As such, it was unreasonable, on an objective basis, for the employer to have concluded that the employee had abandoned his employment. Instead, the employee's employment had been wrongfully terminated.

Reasonable Notice Period

The employee was 38 years old at the time of termination, had seven years service and was responsible from anywhere between 40 and 45 employees. He had also relocated from Prince George to Nanaimo. He earned approximately $58,000 per annum plus bonuses and stock.

The court stated that in the normal course of things, it would have awarded the employee an eight month notice period. However, given the employee's "past health problems and existing vulnerability", both of which were known to the employer at the time of dismissal, the court concluded that a 10 month notice period was reasonable in all the circumstances.

Wallace Damages

The employee pointed to the following in support of his claim for Wallace damages:

  • the employer dismissed him as soon as it was advised by the insurer that a letter was being sent to the employee advising him that his LTD benefits were terminated. The employer knew that the employee had the right to appeal
  • the employer had a policy of granting a 90-day medical leave of absence if requested. By dismissing him the day after his LTD benefits were terminated, the employer denied him his right to a medical leave.
  • the employer failed to advise the employee in its September 28, 2004 dismissal letter that he was still eligible to appeal the insurer's denial, despite his dismissal.
  • once he learned of his dismissal from his former colleague, the employee almost immediately relapsed.

The court stated that two requirements must be established before Wallace damages will be awarded:

  1. egregious or reprehensible conduct in the manner of dismissal; and
  2. proof that the manner of dismissal gave rise to harm that was in the contemplation of the parties.

The court concluded that in the unique circumstances of this case, Wallace damages were not appropriate because there was no communication between the parties about the dismissal at the actual time of that event (i.e., on or around September 28, 2004), nor was there any evidence that the employee's eventual receipt of the dismissal letter - some three weeks later - caused the employee any mental distress or difficulty.   

Punitive Damages

The employee claimed for punitive damages based primarily on the content of some communications between the employer's human relations consultant and the insurer.

In short, the court found that the communications could be construed as effort by the employer to dissuade the insurer from extending benefits to the employee, and had included unsupported statements such as the employee having been "evicted" and "chased out of Nanaimo".

However, the court concluded that while the communications were "clearly troubling" and "unfortunate and improper", they "likely reflected a lapse of judgment rather than any animus" towards the employee. The court further stated that this lapse or error in judgment was not "so extreme in nature" to warrant condemnation or punishment though an award of punitive damages.

Mitigation

The court noted that the obligation to mitigation is defined, at law, with reference to the particular employee involved, and that regard must be had to the employee's physical and mental condition. The court also noted that it is generally accepted that an employee is to be provided with some flexibility in commencing a job search.  

The court then stated that the employer had not discharged the onus of establishing that the employee failed to mitigate his losses, pointing to the following factors:

  1. the employee's illness impaired his ability to look for work;
  2. the employer did not lead any evidence to suggest that the employee would have, with diligent effort, secured acceptable alternate employment within the notice period.
  3. even without his relapse, the employee may well have only been able to work on a graduated basis.
  4. once the employee was healthy and actively began the process of finding work, it had taken him some six to seven months to find similar work.

The settlement with the insurer

The employee's lawsuit had originally been against both the employer and the insurer and the Statement of Claim had alleged a number of distinct causes of action against both parties, including a bad faith claim against both parties and alleged various breaches of statutory duties by the insurer.

Prior to the action being heard, however, the employee had received a $60,000 "all inclusive" settlement from the insurer.  The Memorandum of Settlement between the employee and the insurer had allocated $2,500 to costs and disbursements, but had not stated what part of the remaining $57,500 pertained to the claim for lost LTD benefits and what, if any, portion pertained to his other claims.

At trial, the employer and the employee parties were in agreement that LTD benefits may be deducted from wrongful dismissal damages based on the Supreme Court of Canada's decision in Sylvester v. British Columbia, 1997 CanLII 353 (S.C.C.).

The court also noted that "The rule that long-term disability benefits should be deducted from wrongful dismissal damages has also been applied in circumstances where the long-term disability payments were made pursuant to a settlement between an insurance provider and an employee: Kingsberry v. Minto Developments Inc. (1999), 41 C.C.E.L. (2d) 265 (Ont. Gen. Div.)." (para. 118).

The employer argued that the entire $57,500 should be deducted from any award the employee received for wrongful damages.  The court rejected this argument, stating that the employer had:

...failed to establish what portion of the $57,500 figure pertains to long-term disability payments, other categories of payment within the ambit of the long-term disability provision, damages for other causes of action or for other forms of damage including damages for mental distress. There is no evidential framework, nor any principled basis for me to make such allocations. Instead, any attempt to do so would be speculative and I decline to do so (para. 124).