Nagpal v. IBM Canada Ltd.: Ontario court emphasizes that resignation must be “clear and unequivocal”

 

In a recent decision of the Ontario Superior Court, the court considered whether an employee’s failure to return to work after his disability benefits were denied amounted to a voluntary resignation.

Vinay Nagpal worked for IBM Canada for more than twenty-three years, over fifteen of which were in managerial positions.

In January 2012, Nagpal began a new position at IBM, for which he had been highly recommended. Over the course of the next year, he experienced difficulties with his team.

Nagpal’s evidence is that he sought help from his supervisor, but did not feel adequately supported. He claimed that after receiving a poor performance evaluation from his supervisor for the first time in January 2013, he divulged that he had been experiencing stress and mental health problems. Although the supervisor denied being made aware of these issues, he had been tracking Nagpal’s increasing absences from work since November 2012.

Nagpal called in sick on March 14, 2013.

On March 19, 2013, Nagpal advised IBM that his doctor recommended that he take six weeks off work. A representative from IBM’s Integrated Health Services department wrote to Nagpal that day advising that he would be referred to Manulife, which administers IBM’s short-term disability benefits plan.

Nagpal was initially approved for short-term disability benefits. The policy paid one hundred percent of benefits up to twenty-six weeks. The policy stipulated that if benefits were denied, the employee had two options: appeal or return to work. If the employee did neither, the policy deemed him to have voluntarily resigned from his position.

Manulife denied Nagpal ongoing STD benefits on July 19, 2013. Nagpal was advised of the option to appeal but was reportedly told that there was no point if there was no further medical documentation available.

He never appealed.

IBM demanded that Nagpal return to work or else he would be considered to have resigned. Nagpal sought legal advice, and his counsel communicated to IBM that he was not resigning but was not well enough to return to work at that time. Over the next several months, IBM maintained its position toward Nagpal: return to work or consider your employment at an end. Nagpal’s lawyer continued to maintain that he would return to work when medically cleared.

Nagpal never returned to work.

On October 9, 2013, IBM advised Nagpal that it considered his employment position to have been abandoned.

In December 2013, Nagpal brought a claim against IBM for wrongful dismissal. IBM alleged that he had voluntarily resigned/abandoned his position or that his contract of employment had been frustrated.

Nagpal subsequently sued Manulife, and that action was settled.

On IBM’s motion for summary judgment, Justice Schabas found that Nagpal did not resign or abandon his position, and that the employment contract was not frustrated. He accordingly dismissed IBM’s motion. The justice further held that Nagpal was wrongfully dismissed and granted summary judgment in his favour.

Justice Schabas emphasized that a resignation or abandonment must be clear and unequivocal. In his view, the facts supported neither. While Nagpal did not return to work, it was evident from his ongoing correspondence that he did not intend to resign.

Justice Schabas pointed out that many of the letters sent by the Nagpal’s lawyer were not answered, as IBM chose to solely rely on the STD information and process which was delegated to Manulife. He found, however, that Manulife’s policy’s term of deemed voluntary resignation was not determinative of the issue and was not incorporated by reference into Nagpal’s contract of employment. In his view, IBM should have done more to obtain further information about Nagpal’s condition.

The justice noted similarities between this situation and the one in Lippa v. Can-Cell Industries Inc., 2009 ABQB 684, where an Alberta court found that poor communication about the employee’s condition could not be relied upon to support a deemed resignation or abandonment, and found there was not a clear and unequivocal resignation.

Justice Schabas also rejected IBM’s argument that at the time of dismissal Nagpal’s employment had been frustrated. He declined to give any weight to the fact that Nagpal continued to be unemployed at the time of the motion. Instead, he reminded the parties that only evidence that was available at the time of the termination should be considered when addressing frustration. The justice found that there was insufficient evidence to prove that there was no reasonable prospect of Nagpal returning to work in the foreseeable future.

Accordingly, frustration was not made out entitling Nagpal to wrongful dismissal damages.

Key Takeaways

This decision reaffirms the law that a resignation must be “clear and unequivocal”. The burden of proving a resignation lies with the employer, and the courts appear to be placing a high burden on employers to ensure that any supposed resignations are truly clear and unequivocal. Employers must do their due diligence before taking the position that an employee has resigned. Proper documentation and procedures are essential in these situations. Particularly in cases where aging long-term employees may be waffling on when to retire, it is important to confirm these intentions in a clear fashion. Otherwise, employers may see themselves on the receiving end of a wrongful dismissal claim for significant notice periods.

Minken Employment Lawyers is your source for expert advice and advocacy on today’s employment law issues. Whether you are an employer or an employee, we can help. Contact us to see how.

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