Executive Summary: Key Legal and Evidentiary Issues

• Whether Mr. DeCarlo voluntarily resigned or was pressured into signing an Exit Form while en route to a pre-approved vacation.

• If the resignation was involuntary, whether it constituted wrongful or constructive dismissal, and whether just cause existed to terminate him.

• Enforceability of the termination clause in the Offer of Employment, which used ambiguous language (including the word "proscribe") purporting to limit notice to the Employment Standards Act minimum.

• Whether undated Employee Handbooks, signed 11 days after employment began without fresh consideration, could validly restrict common law reasonable notice entitlements.

• Adequacy of Mr. DeCarlo's mitigation efforts given the COVID-19 pandemic's impact on the hospitality industry and the Employer's repeated assurances of reinstatement.

• Entitlement to punitive damages based on the Employer's breach of its duty of good faith and honest dealing.

Background and facts of the case

Mr. Craig DeCarlo, a 44-year-old server, was employed for 4.5 years at Black + Blue, a "high-end" steak restaurant located in downtown Vancouver and operated by 0894546 B.C. Ltd., from November 7, 2015 to January 27, 2020. In the summer of 2019, he sought and obtained approval from the then-General Manager, Mr. Bill Modrovic, for a six-week vacation to Australia from January 27 to March 16, 2020, formalized through a standard vacation request form submitted in July 2019. Before the vacation began, Mr. Modrovic left the company and was replaced by Ms. Jennalee Chabre (née Norwood). On January 27, 2020, while en route to the airport intending to collect his gratuities, Mr. DeCarlo was asked by Ms. Chabre to follow her into her office, where she printed an "Exit Form" and told him he had to sign it and was required to resign due to the extended duration of his vacation as a matter of company policy. Despite voicing objections and reminding her that his trip had been previously approved, Mr. DeCarlo signed the form after 20 minutes of continued pressure, believing his job would be waiting for him upon his return. Ms. Chabre checked the box "Leaving the Country or Relocating" and handwrote "coming back," wrote "Off Board Extended Holiday" adjacent to "Acceptance of Employee Resignation," and also checked "Rehire Recommended"; no box under "Notice of Employee Termination" was checked.

Return from vacation and failed reinstatement

Upon his anticipated return in March 2020, Mr. DeCarlo contacted Ms. Chabre on March 9, 2020 expressing that he "would love to come back to work," and contacted the Assistant General Manager, Mr. Ardallan Xiderbagi, who welcomed him and assured him "everything is fine." A meeting set for March 18, 2020 was rescheduled due to COVID-19, and on or about March 20, 2020, the Employer temporarily suspended operations. In late May 2020, Ms. Chabre told Mr. DeCarlo he was still welcome to return but that she was not authorized to rehire anyone until all employees employed on the day operations were suspended were offered their original positions back first. Throughout 2020 and into 2021, Mr. DeCarlo repeatedly sought reinstatement and was told the Restaurant was continuing to enforce a hiring freeze. Internal communications revealed that on February 12, 2021, Ms. Chabre wrote to Ms. Tammi Orr (the Restaurant's Payroll and Human Resources Manager) stating, "I'm not hiring him back – should I just say that he was very negative and awful towards my management team, entitled." This message was never conveyed to Mr. DeCarlo, who only realized in March 2021 that the reinstatement assurances were unfounded. He secured comparable employment on July 1, 2021.

Employment contract and policy disputes

Mr. DeCarlo's Offer of Employment, signed October 23, 2015, contained a termination clause stating termination pay would "include severance pay entitlements under the Employment Standards Act, if applicable," and that he would not be entitled to pay "in excess of the entitlements proscribe by" the Act. He was asked to sign an Employee Handbook Acknowledgement Agreement on November 18, 2015, 11 days after he started working at the Restaurant, without receiving any signing bonus, raise, or other consideration. Two undated Employee Handbooks were produced, neither signed by Mr. DeCarlo, and neither required an employee to resign in order to take an extended vacation; both permitted leaves of absence. Mr. Modrovic deposed that he was not aware of any written policy at Black + Blue requiring employees taking vacation longer than two weeks to resign.

Performance history

Over 4.5 years, Mr. DeCarlo received two favourable performance reviews. His first, on May 27, 2016 by "Sarah McC" (AGM), rated him highly, including 4 out of 4 for "taking responsibility and accountability" and reliability ("Never Late Never Sick"). His second review on March 11, 2018 by Ms. Paige Stewart rated him "4" out of "5" (Exceeds Expectations) in Job Responsibilities, Excellence, and Teamwork, and "3" in Drive. He had minor prior incidents: a Disciplinary Action Form on August 20, 2016 for not serving water in a timely manner; a Disciplinary Action Form on April 17, 2017 for not placing napkins on customers' laps (issued by supervisor Franck Krynen); and a "Note to File (Coaching)" on July 3, 2017 for eating a Caesar salad in the server section. None of these had disciplinary action boxes checked. A customer complaint on August 29, 2018 resulted in no disciplinary action. On December 26, 2019, following an altercation with supervisor Ms. Kim Tran, he received a "final written warning" following a disciplinary meeting on December 27, 2019, but was not suspended or terminated.

Court's analysis on resignation and dismissal

Applying the two-part test from Beggs v. Westport Foods Ltd., 2011 BCCA 76, Justice Morellato found that Mr. DeCarlo did not voluntarily resign, as there were no "clear and unequivocal acts" indicating he intended to end the employment relationship. The Court accepted his evidence that he felt pressured, was upset, and did not want to resign. Objectively viewed, the Employer's actions amounted to a dismissal, and citing Samuda v. Recipco and Fierro and Keddie v. Dumas Hotels Ltd., the Court concluded that a forced resignation constitutes constructive dismissal. The Employer failed to meet its heavy burden of establishing just cause under the McKinley v. BC Tel contextual approach, as Mr. DeCarlo's behaviour, viewed in all the circumstances over 4.5 years, was not "seriously incompatible with the employee's duties" nor "so grievous" as to intimate abandonment of the employment relationship.

Enforceability of the termination clause

The Court found the termination clause in the Offer of Employment did not clearly rebut the common law presumption of reasonable notice. The words "to include," "if applicable," and "proscribe" (meaning to forbid or prohibit) created ambiguity that could not be dismissed as immaterial, distinguishing the case from Brown v. Utopia Day Spas and Salons Ltd. Additionally, the Employee Handbook Acknowledgement Agreement was signed without fresh consideration 11 days after employment began, rendering its termination provisions unenforceable per Rahemtulla v. Vanfed Credit Union and related authorities.

Mitigation, damages, and ruling

The Court found that Mr. DeCarlo adequately mitigated his losses by increasing hours at the Keg Steakhouse Restaurant from May 28, 2020 onward and eventually securing comparable employment on July 1, 2021. Considering the Bardal factors, his 4.5 years of service, age, the COVID-19 pandemic's impact on the hospitality industry (per Escobar v. Ocean Pacific Hotels Ltd.), the Employer's repeated assurances over about a 12-month period, and Mr. DeCarlo's forced resignation, the Court determined a 14-month reasonable notice period was justified. Based on average monthly earnings of $6,337.50 (including wages and gratuities, with 2019 wages of $16,369 and gratuities of $59,681), damages totalled $88,725. Mitigated income of $18,700 (calculated at $1,870 per month over 10 months) was deducted, yielding a loss of $70,025. The Court further awarded $20,000 in punitive damages, finding the Employer breached its duty of good faith by coercing the resignation on the pretense of a company policy not proven to exist, and by making misleading assurances about reinstatement for over a year while internally deciding not to rehire him. Judgment was granted in favour of Mr. DeCarlo in the total amount of $90,025 plus pre-judgment interest, with costs to be addressed separately.