Resignation Agreement Binding in For Cause Termination Dispute

In Sobeys Western Cellars Inc. v Alamag, 2025 ABESAB 4, a liquor store manager was found to have breached the rules of an in-store promotional contest, leading to his for cause termination which was later characterized as a resignation following an agreement between the parties. The employee subsequently filed an Employment Standards Complaint, alleging his termination was without cause and that he was thus owed termination pay. However, the employee’s claim was denied on appeal on the grounds that he had entered into a binding resolution with the employer when he initially agreed to resign.

This decision is important because it demonstrates the elements the Alberta Labour Relations Board will consider in determining whether a binding agreement exists. The decision further serves as a reminder to employees and employers to be mindful of the possible binding effects of resignation resolutions, no matter how formal or informal they may seem.

Facts

• The Employer, Sobeys Western Cellars Inc., owns and operates several retail liquor stores in Alberta
• The Employee, Mr. Alamag was a Store Manager at one of the liquor stores owned by the Employer, and had been employed there for 17 years with no history of discipline
• The Employer had a loyalty card program, which rewarded customers with redeemable points arising from in-store purchases, called Scene+ Cards
• Between October 19 and November 15, 2023, the Employer conducted a competition between its stores to increase use of the Scene+ Cards
• Cashiers at participating stores were encouraged to promote registration and use of Scene+ Cards during this time, and the store with the most new membership sign-ups would win a grand prize of approximately $3,500 to be distributed amongst its employees
• Initial statistics were disappointing across all stores, however, in the final week of competition, Mr. Alamag’s store showed a spike in Scene+ Card registrations, going from 60% to 81.49% in just one week
• Alamag’s store ultimately won the competition
• Because of the dramatic spike in registration, however, the Employer conducted an investigation at Mr. Alamag’s store
• The investigation revealed that two out of every five transactions at Mr. Alamag’s store were competed by Scene+ ghost card numbers, meaning that they were not registered to a customer
• Alamag admitted to providing customers with the cards at the time of purchase, even if they had indicated they did not want a card, and he further admitted to directing his employees to do the same
• As a result of his conduct, the Employer issued Mr. Alamag a for-cause termination letter on November 30, 2023
• At the material time, Mr. Alamag protested that while his conduct may have breached Employer policy, his conduct did not amount to just cause
• Alamag was then escorted out of the store by an Employer representative
• As the Employer representative was walking Mr. Alamag out, he advised Mr. Alamag that he could instead choose to resign, and that he would wait until the following morning before moving to enter the termination in the company’s records
• The next morning, Mr. Alamag tendered his resignation via phone call and email to the Employer representative
• The Employer formally logged Mr. Alamag’s cessation of employment as a resignation in the company’s records, which was reflected in Mr. Alamag’s Record of Employment (“ROE”)
• On January 9, 2024, Mr. Alamag filed an Employment Standards Complaint seeking termination pay
• On July 2, 2024, an Employment Standards Officer directed the Employer to pay Mr. Alamag termination pay
• The Employer appealed the decision pursuant to Section 95(2)(b) of the Employment Standards Code (the “Code”)

Analysis / Conclusion

In review of the facts, the Board identified 2 issues:

1. Did the Employee and the Employer enter into an agreement to treat his termination of employment as a resignation, and if not,
2. Did the Appellant have just cause to terminate the Respondent

The Board began by turning to the relevant sections of the Code that state when an employee is owed and not owed termination pay. Section 55(2)(a) of the Code provides that termination notice or pay in lieu is not required where the termination is for cause. Section 56 of the Code provides that an employer must provide notice or pay in lieu of notice when an employer terminates the employment of an employee (without cause). Since Mr. Alamag resigned, section 56 of the Code was not activated.

Further, the resignation was agreed upon by the parties at the material time. The Board concluded that the Employer and Mr. Alamag had negotiated a binding settlement, which was supported by the following factors:

• When Mr. Alamag was departing from the store, there was a conflict with the Employer as to whether a for cause termination was appropriate
• Alamag accepted the Employers offer to resign instead, which would serve to benefit him in seeking alternative employment
• There was no undue pressure placed upon Mr. Alamag when offered the option to resign
• Alamag was also aware of the value of a resignation versus a termination for cause, and
• The Employer received a resolution to a potential dispute over whether there had or had not been just cause for termination which served to benefit the Employer

The binding nature of the agreement was further supported by the fact that both parties fulfilled their part of the resolution, with Mr. Alamag tendering a formal resignation, and the Employer formally reporting the resignation in the company records and in issuing Mr. Alamag’s ROE.

Consequently, there was no need to establish whether the termination was for cause or without cause, as the agreement was binding. The earlier order requiring the Employer to pay Mr. Alamag termination pay was revoked.

My Take

This decision should serve as a useful reminder to both employers and employees that engaging in negotiations to handle disputes can have lasting consequences, especially if both parties uphold their end of the deal. It also demonstrates that even if there was not just cause for termination, that in and of itself is not enough to displace a binding agreement made between parties.

In my view, this decision does not come as a surprise and ultimately reminds us that contract law will prevail when the requisite elements are present, whether formalized in a written contract or not. 

However, there are a few policy arguments I think the complainant may have been able to make here to cast this result in doubt: (1) An employer cannot normally extract a resignation from an employee who is still employed.  Where an employer asks an employee to resign, this could be found to be a termination or constructive dismissal, and (2) Employees are often allowed to take back a resignation if it was given “off the cuff” or in the heat of the moment, and employers are often not allowed to call it a resignation in those circumstances.

Bow River Law provides these regular legal blog articles for the purposes of legal news, education and research for the public and the legal profession.  These articles should be considered general information and not legal advice.  If you have a legal problem, you should speak to a lawyer directly.

Bow River Law is a team of knowledgeable, skilled and experienced employment lawyers handling employment law, human rights (discrimination) and labour law matters.  Bow River Law is based in Calgary but we are Alberta’s Workforce Lawyers.