An employee, unhappy with her employer’s criticism of her performance at work, retains legal counsel to write a letter on her behalf, demanding that the employer retract statements made about her and issue an apology. The letter threatens legal action if an apology is not provided. Does the letter constitute a resignation if the apology is not provided? If not, is the employer entitled to terminate the employee’s employment for cause? These questions were considered in the decisions of the BC Court in Grewal v. Khalsa Credit Union, 2011 BCSC 648; affirmed 2012 BCCA 56.

The employee commenced employment as a teller at the employer credit union in 1989. By 1999, the employee had moved up through the ranks of the employer and had become the Vancouver branch manager. Shortly thereafter, the employer raised concerns about breaches of the employer’s policies and procedures by the employee, noting to the employee that such breaches were not acceptable and resulted in a loss of trust concerning the employee’s ability to carry on with her current position. The employee was then moved to the Abbotsford branch, a reassignment considered to be a demotion. The employee continued working for the employer credit union until October 2005, when she went on disability leave. She remained off work until August 2006.

In the years following the employee’s reassignment from the Vancouver branch and prior to the disability leave, the employer’s CEO wrote to the employee on several occasions, criticizing aspects of her work. A number of issues were raised including “the failure of staff to wear nametags, giving preferred rates on certain loans, failure to spin locks at the end of the day, failure to advise head office of a search warrant, failure to advise head office of the attendance of a FICOM investigator at her branch, late attendance at her office, failure to have regular staff meetings, and arriving late and being disrespectful at a head office staff meeting.” The employee, upset by what she viewed as unwarranted criticism, sometimes responded in writing to the criticisms. The employer’s CEO considered certain responses to be insubordinate and disrespectful. The employee also complained about violations of her privacy but refused, when asked by the employer, to provide particulars or sources of the allegations being made.

Shortly before the employee went on disability leave, the employer identified irregularities about the employee’s mortgage on her home from the credit union and its renewal. The employer took steps to arrange a meeting with the employee regarding its concerns but, before the meeting could take place, the employee went on disability leave. On several occasions during the disability period, the employer wrote to the employee requesting the opportunity to communicate regarding the mortgage concerns and, noting that the employee was on leave, suggested various means of proceeding. A meeting ultimately took place within a couple of days following the employee’s return from disability leave. On the day following the meeting, a letter was delivered by the employee’s legal counsel to the employer’s CEO (the “First Letter”). The First Letter alleged that there had been “serious unwarranted invasions of our client’s privacy, done by [the CEO] or at [the CEO’s] direction”. The First Letter further suggested that the employer’s CEO had levelled petty complaints against the employee as a pretext to discipline and dismissal. The First Letter then stated:

We demand that within 21 days from the date of this letter you issue a written apology to [the employee] acknowledging that your actions in going to the board of directors, testifying on oath at the FICOM hearing, levelling this untrue accusation of a mortgage scandal at her and repeatedly making baseless allegations of performance failures in her job as a manager were done by you in bad faith with the intent of injuring [the employee] and her reputation. You must promise to refrain from any and all such conduct in the future. Clearly, you will need to obtain legal advice in resolving this very serious matter. As [the employee’s] solicitors we will want to review the apology letter in order to ensure that it addresses all of our client’s concerns regarding her mistreatment at your hands. This letter must be addressed to our client and copies provided to the board of directors of the credit union and to [the] Deputy Superintendent of Credit Unions and Trusts.

In the event that we receive a timely apology which is satisfactory to our client we have instructions to release you and the credit union from liability for this tortuous conduct. If you choose not to apologize we will commence an action against you and the credit union seeking compensatory and punitive damages.

The First Letter was copied to the employer’s board of directors and to B.C. Deputy Superintendent of Credit Unions and Trusts. The employer did not respond to the First Letter. Several days thereafter, the employee’s lawyer sent the employer’s CEO a further letter which did not resile from any of the positions taken in the First Letter (the “Second Letter”). The employer responded to the Second Letter, advising that there would be no apology and noting the issues that it had had with the employee’s performance. The employer’s letter concluded that the employee had acted in a manner inconsistent with her employment and that she had thereby severed the employment relationship.

At trial, the Court characterized the First Letter as “disrespectful and inflammatory” with accusations that were “serious and covered most of her working relationship”. The Court noted that the First Letter demanded that her superior, the employer’s CEO, acknowledge that he had acted in bad faith with the intent to injure the employee and her reputation. The Court also noted that the First Letter demanded that the CEO apologize in a manner acceptable to the employee’s legal counsel and that the CEO had to refrain from future criticism of her performance.

Despite the Court’s comments about the First Letter, the Court held that the First Letter did not constitute a resignation by the employee. In doing so, the Court reaffirmed that a resignation by an employee must demonstrate a “clear and unequivocal intention to end the employment relationship”. The Court did, however, find that the First Letter, when coupled with the employee’s performance history, tipped the balance and entitled the employer to terminate the employee for cause. In reaching this conclusion, the Court also noted that the history of insubordination (which included copying correspondence to the CEO’s secretary, even after she was told not to do so, and failure to fully disclose the information that was known to her regarding her mortgage during the employer’s investigation) alone would not have justified her termination. In considering the impact of the First Letter, the Court held that the letter could not be considered in a vacuum and had to be considered in the context of the employee’s history with the employer credit union. The First Letter was viewed by the Court as the culmination of a litany of ongoing difficulties in the employment relationship.

The Court concluded by noting that the employee was a branch manager and was therefore in a position of trust and responsibility. Given her role with the employer, it was essential that the employee retain the confidence of her superiors in order to perform her duties. The Court held that the First Letter permanently undermined the employment relationship and made it impossible for the employer’s CEO and the employee to work together. Under these circumstances, the First Letter constituted just cause for dismissal.

What can employers take from this case?

• The standard for termination for just cause remains a high one. In this case, a history of ongoing difficulties in the employment relationship would not have, in and of itself, justified a termination. At the same time, the First Letter alone would not have provided the basis for dismissal for cause. Rather, it was the combined effect of the First Letter, the employee’s history with the employer and her senior position with the employer that resulted in a finding that the employment relationship was no longer tenable from the employer’s perspective.
• An employer should proceed carefully in investigating allegations against an employee and should give the employee an opportunity to respond. In this case, the employer, which had not completed its investigations, would not have had grounds for termination merely based on its concerns about the circumstances surrounding the employee’s mortgage.
• The Court will only find that an employee has resigned where the employee has expressly communicated his or her intention to do so. A letter issuing a demand to the employer that the employer apologize or legal action would be taken will not be held by the Court to evidence such an intention.