Ultimatum tantamount to dismissal

Date: 2007
Author: Daniel A. Lublin
Publication: Metro
Summoned to his boss’s office, Stew Schwindt was handed a piece of paper that stated that he was resigning and told that it would be best to sign his name.  Besieged, Schwindt scribbled his signature and then was immediately escorted off the premises of the Regina-based Canadian Tire franchise, where he had managed the service department for nearly a quarter of a century.  But Schwindt had not agreed to retire and believed that his employer had acted improperly.  Recently, a Saskatchewan judge resoundingly agreed.
After a three-year hiatus from Canadian Tire, Schwindt was asked to return by the new store president, Neil Sulkers.  Schwindt’s employment proceeded uneventfully for the next seven years, until Sulkers became unimpressed with Schwindt’s performance and asked him for a business plan with suggestions to control rising wage costs and reduced profit margins.
But Sulkers actually had another plan in mind.  During the time that he was monitoring Schwindt’s performance, he had also been talking to another employee of the store about replacing Schwindt.  Shortly after the other employee agreed, Sulkers put his plan in place by calling Schwindt into his office and presenting him with a letter stating that he had resigned.
At trial, Sulkers argued that Schwindt had resigned by signing the letter or that his failure to produce a business plan when asked to do so, permitted Sulkers to terminate Schwindt without pay.  But even though Schwindt had signed the letter, it could hardly be said that he had voluntarily resigned.  Schwindt was pressured to sign his name and in such circumstances, the purported resignation was really a termination, ruled the judge.
Further, the judge bluntly rejected the argument that Schwindt’s failure to develop a business plan was a valid reason to fire him without pay, finding that instead this was just a ruse designed to allow Sulkers an excuse to replace Schwindt with the other employee.  Once Sulkers had the other employee to fill the position, all he had to do was force Schwindt to resign, stated the judge.
Canadian courts are loath to uphold a resignation proffered under circumstances of pressure or an ultimatum and instead will usually find that the employee had been fired.  But this decision also conveys a number of other important lessons for employers:

  • Assert cause for dismissal intelligently and only where serious misconduct can be proven.  The judge swiftly dismissed the allegation that Schwindt’s conduct precipitated his dismissal.
  • Where poor performance cannot be proven, do not rely on it to terminate employees or provide them with insufficient severance.  Schwindt’s employment record showed no dissatisfaction with his performance, which was inconsistent with Canadian Tire’s arguments at trial.
  • Handle terminations with caution.  As in this case, Canadian courts will chastise employers’ scuzzy behaviour by awarding damages in excess of the normal value of the claim.