Dissolving Operations while an Employee is on Maternity Leave – can be a Constructive Dismissal
In Lewis v. Terrace Tourism Society, 2010 BCCA 342, the BC Court of Appeal found that Executive Director, Jennifer Lewis of the Terrace Tourism Society was constructively dismissed when the Society took steps to dissolve its operations while she was on maternity leave.
After nearly three years service, Lewis commenced maternity leave at the end of 2006. Two weeks later the Society found itself in a dire financial state when it lost its funding source. It immediately laid off the interim Director and a month later passed a "dissolution" resolution to give its assets to the Terrace Chamber of Commerce, close the office and website, cease all operation and terminate Lewis' position.
Although the Society seemed to recognize that it owed severance to Lewis, she had not received any offer of severance pay when the society began to dispose of its assets. Lewis started proceedings in Small Claims Court for wrongful dismissal in March of 2007. In April, the Society advised Lewis that her employment was terminated for just cause because of her litigation. Lewis then commenced a fresh action in Superior Court for wrongful dismissal and constructive dismissal.
In March 2008 the trial judge dismissed the action and found that she had not been constructively dismissed and that the filing of a Small Claims lawsuit formed the requisite just cause to terminate her employment.
On Appeal this decision was reversed. Levine J.A. writing for the majority, held that Lewis' entitlement to reasonable notice on termination of her employment was not altered upon commencement of a maternity leave, relying on section 67(1)(a) of the Employment Standards Act, R.S.B.C. 1996 which protects employees on leave from dismissal with notice that coincides with the period of leave. If Lewis had not been on leave when these events occurred, the steps taken by the Society would amount to her dismissal. Lavine J.A., held that Lewis' position was obviously terminated when the Society passed the resolution to cease operations and eliminate the executive director position, stating "she knew of these actions, and they could leave no reasonable doubt in her mind that her employment had come to an end." The fact that she was on leave did not impact her legal entitlements, and therefore she could claim constructive dismissal.
Although there was a lengthy dissenting judgment, on Appeal the majority was not of the opinion that the employer's intention to calculate and offer severance was enough to negate a finding of constructive dismissal. Since Lewis was constructively dismissed and her employment contract repudiated, it was within her rights to launch a claim in Small Claims Court.