Forced Resignation, Bad Faith, and Unenforceable Termination Clauses
Update by Erin Brandt, Cofounder
Usually, when an employer pre‑approves an employee’s vacation request, the employee will have a job to return to when they come home. Oddly, that was not the case in DeCarlo v. 0894546 B.C. Ltd. (Black + Blue), 2026 BCSC 684.
Background
Mr. DeCarlo worked as a server at Black + Blue, a high‑end Vancouver steakhouse, for approximately 4.5 years. In July 2019, he received approval from the restaurant’s general manager to take a six‑week vacation beginning in January 2020.
On his way to the airport, Mr. DeCarlo stopped by the restaurant to collect his tips. The newly appointed general manager unexpectedly pulled him into a meeting and told him that company policy required his resignation because his vacation exceeded two weeks. In response to his objections, his manager told him his resignation was non‑negotiable.
Under time pressure and concerned about missing his flight, Mr. DeCarlo signed an “exit form” indicating resignation. The form also noted “rehire recommended” and included handwritten language suggesting he would be “coming back.”
Mr. DeCarlo returned from vacation in March 2020 and made efforts to get back on the schedule. After a brief quarantine and temporary restaurant closure, he persisted in his efforts to return to work and was repeatedly led to believe he would be rehired. Internally, however, the employer decided not to rehire him. After more than a year, Mr. DeCarlo realized his employer had not been honest with him and commenced a wrongful dismissal claim.
The Decision
Resignation v Constructive Dismissal
The Court rejected the employer’s position that Mr. DeCarlo had voluntarily resigned. The Court reaffirmed that a resignation must be a clear and unequivocal act reflecting the employee’s genuine intention to end the employment relationship. Both the employee’s subjective intent and an objective assessment of their words and acts must be considered.
Here, the evidence showed that Mr. DeCarlo expressly stated that he did not want to resign, had previously obtained approval for his vacation, and consistently attempted to return to work. The resignation was obtained at the last minute, under pressure, and not actually required by an enforceable employer policy.
The Court found the resignation involuntary and amounted to constructive dismissal.
Just Cause
The employer also argued that it had just cause to dismiss Mr. DeCarlo based on prior disciplinary issues. The Court rejected this argument, noting that:
Mr. DeCarlo was not dismissed for cause at the time of the alleged misconduct
His exit form did not reference termination or misconduct
Rehire was expressly recommended
His performance history was largely positive
Progressive discipline had not yet led to just cause
Accordingly, the Court concluded that the employer failed to meet the high threshold required to establish just cause.
Termination Clause and Damages
The employer argued that Mr. DeCarlo’s severance was limited to the minimums under the Employment Standards Act (“ESA”), relying on language in an employment offer and employee handbooks, but the Court disagreed. It found:
The clause in the offer letter which stated that termination pay would “include” ESA entitlements, used the phrase “if applicable,” (implying the ESA does not necessarily apply) and incorrectly referred to severance “proscribed” (rather than “prescribed”) by the ESA did not clearly and unambiguously displace the employee’s entitlement to common‑law reasonable notice.
The termination provisions in undated employee handbooks were not binding as they were introduced after employment began without fresh consideration.
As a result, Mr. DeCarlo was entitled to 14 months common law reasonable notice, based on his age, length of service, role, and the availability of comparable employment during the COVID 19 pandemic in 2020. The court also took into account the employer’s repeated assurances regarding rehire which delayed Mr. DeCarlo’s mitigation efforts.
The Court also awarded $20,000 in punitive damages, finding that the employer acted in bad faith by coercing Mr. DeCarlo into resigning and misleading him about his re‑employment prospects.
Key Takeaway for Employees
An employer cannot legally force an employee to resign. Employees who do so under pressure should promptly document their objections to preserve severance rights.
Further, an employer’s bad‑faith behaviour, such as dishonesty, can provide grounds for additional compensation in a wrongful dismissal claim.
Key Takeaway for Employers
Termination clauses in employment agreements must be precisely drafted and should be signed before the employee’s start date. Employment contracts or policies presented after the employee’s first day are unlikely to be enforceable in the absence of fresh consideration (i.e. something new of value to the employee).
We recommend having employment contracts and policies reviewed annually to ensure internal company documents match actual practice and remain legally compliant. Relying on an unwritten or inconsistently applied “policy” will be difficult to later enforce in court.
