Resignation from Employment in Ontario

Overview

An employee who intends to resign must provide his or her employer with reasonable notice of resignation.¹Lazarowicz v. Orenda Engines Ltd.(1961) 1960 CanLII 151 (ONCA); Oxman v. Dustbane Enterprises Ltd., 1988 O.J. No. 2067 (Ont. C.A.)(reg. required)

If the employee does not provide the employer with sufficient notice of resignation, the employee may be liable to pay the employer damages for wrongful resignation.

A resignation must be voluntary. The resignation must objectively reflect an intention to resign or conduct evidencing such an intention. It must be clear and unequivocal. Whether the employee’s words or actions amounted to an intention to resign is determined contextually. A court will consider the surrounding circumstances and determine whether a reasonable person, viewing the matter objectively, would have understood the employee to have unequivocally resigned.²see Kieran v. Ingram Micro Inc., 2004 CanLII 4852 at paras. 27 and 30 and Danroth v. Farrow Holdings Ltd., 2005 BCCA 593 at para. 8; If a resignation is not voluntary the employee will have been terminated without cause and entitled to a severance package.

The employee’s state of mind is a relevant consideration in determining whether or not the objective circumstances reflect a genuine intention to resign. Therefore, resignation has both an objective and a subjective component.³see Beggs v. Westport Foods Ltd., 2011 BCCA 76 at paras. 36-37 and Avalon Ford Sales (1996) Limited v Evans, 2017 NLCA 9 at para. 24;

If an employee resigns in the heat of the moment, in circumstances when the employee is angry, upset, or under stress the resignation may not be voluntary. If the employer refuses to allow the employee to return to work after the employee has had an opportunity to calm down and consider his or her future, the employer may be found to have terminated the employee’s employment.

An employer who defends a wrongful dismissal action by alleging that the employee resigned will bear the evidentiary burden of proving that the employee’s resignation was voluntary.⁴Gebreselassie v. VCR Active Media Ltd., 2007 CanLII 45710 at para. 42;

An employee who has resigned is entitled to “resile” from the resignation and return to work provided that the employer has not relied upon the resignation to its detriment.⁵ Put another way, employees are entitled to change their minds after having resigned and to return to their employment if their employers will not suffer harm or a loss because of the employees’ return to the workplace.

A related concept is “abandonment” of employment. This can occur if the employee leaves the workplace and does not return.  The test for abandonment of employment is whether the statements or actions of the employee, viewed objectively by a reasonable person, clearly and unequivocally indicate an intention to no longer be bound by the employment contract.⁵Nagpal v. IBM Canada Ltd., 2019 ONSC 4547 at para. 31;

An Employer Cannot Force an Employee to Quit 

It is well established that a resignation must be voluntary.  To be voluntary the resignation must be clear and unequivocal. The evidence must objectively reflect an intention to resign, through words or conduct. Context is important. The totality of the circumstances must be considered.⁶see Kieran v. Ingram Micro Inc., 2004 CanLII 4852 at paras. 27 and 30; Danroth v. Farrow Holdings Ltd., 2005 BCCA 593 at para. 8; and Nagpal v. IBM Canada Ltd., 2019 ONSC 4547 at para. 31;

If an employer forces an employee to resign the employee will have been terminated from his or her employment and will be entitled to termination and severance pay.

A useful example of a resignation not being clear in unequivocal was considered by the Ontario Court of Appeal in the 2019 decision English v Manulife Financial Corporation.⁷English v. Manulife Financial Corporation, 2019 ONCA 612; The employee, who was in her early 60’s was contemplating early retirement. After learning that she would need to train on a new computer system she gave her supervisor notice that she would be retiring at the end of the year. He asked if she was sure and she responded “not totally”. He then told her that she could change her mind. Three weeks later Manulife announced that it would not be proceeding with the computer conversion. The employee responded by withdrawing her notice. Manulife refused, telling her that it was “honouring” her retirement notice.

The Court of Appeal found that the facts did not support a clear and unequivocal resignation. Manulife was bound by the supervisor’s promise that the employee could change her mind.

Since the employee had not resigned, her termination was a wrongful dismissal.

A Resignation Made in the Heat of the Moment May Not Be a Resignation

One fact scenario that has repeatedly been considered by the courts occurs when an employee, upset, angry and/or under a great deal of stress suddenly says “I quit” and storms out of the workplace. Hours, or days, later the employee calms down and realizes that the decision to walk out was an overreaction. However, the employer refuses to allow the employee to return to work, the employer refuses, taking the position that the employee resigned.

The courts have repeatedly held that a “resignation” that has occurred as the result of highly charged emotional circumstances will undermine that resignation’s essential voluntariness. Statements or actions that occurred while the employee was emotionally upset may signal an intention to resign, but such an intention is not clear and unequivocal.⁸see Cox v. Victoria Plywood Co-Operative Assoc. (1993), 1993 CanLII 2153 (BC SC); Widmeyer v. Municipal Enterprises Ltd. (1991), 1991 CanLII 4413 (NS SC); Robinson v. Team Cooperheat-MQS Canada Inc., 2008 ABQB 409 at paras. 49-53; Lelievre v. Commerce and Industry Insurance Company of Canada, 2007 BCSC 253 at para. 52; Bru v. AGM Enterprises Inc., 2008 BCSC 1680 at paras. 101-109; Johal v Simmons da Silva LLP, 2016 ONSC 7835 at paras. 35-36; Bishop v. Rexel Canada Electrical Inc., 2016 BCSC 235 at paras. 49-50; Avalon Ford Sales (1996) Limited v Evans, 2017 NLCA 9 at paras. 25-26; 

The onus is on the employer not to accept this type of spontaneous declaration without proper deliberation. An employer should question the employee’s emotional state and true intentions after receiving a resignation statement if the statement may have been made under stress or in the heat of the moment. This is particularly true where the act in question is the only incident when the employee is alleged to have resigned or where there has been a lengthy employment relationship and the employer is aware that the employee has a sensitive disposition and may be emotionally and financially vulnerable.

In the 2016 decision Johal v Simmons da Silva⁹Johal v Simmons da Silva LLP, 2016 ONSC 7835; a 62-year-old law clerk with 27 years of service became upset after being informed of changes that were being made to her department. Feeling pushed aside and extremely because of the changes, she collected cleaned out her office, handed in her security pass and walked out of the office. No one in management called her after her departure to make sure she understood the changes or to clarify her intentions. Five days later, after calming down and receiving legal advice, the law clerk attempted to return to work only to be informed that she had resigned from her employment.

Considering the surrounding circumstances, Justice Sloan found that the law clerk had not resigned but had been dismissed when she attempted to return to work. The law clerk’s sudden departure was out of character. She never said goodbye to any of her colleagues. The judge found that the employer’s response was motivated by the fact that the law firm had too many law clerks and her “resignation” saved it money, potentially severance costs. The firm never attempted to replace the law clerk after her departure.

An Employee Who Has Given Notice of Resignation May Be Able to Change Their Mind

The Ontario Court of Appeal held in Kieran v. Ingram Micro Inc.¹⁰Kieran v. Ingram Micro Inc., 2004 CanLII 4852 at para. 34; that an employee is entitled to resile from his resignation if the employer has not yet relied upon the resignation to its detriment. Put another way, an employee can notify his employer that he has resigned from his employment but change his mind at a later date.

The employer is required to accept the fact the employee changed his mind and allow the employee to return to his position as long as the employer will not suffer any damage as a result. If the employer has not taken any steps to replace the employee or modify his position, the employer is required to allow the employee to resume his position. However, if the employer has taken steps to replace the employee or reorganize the role it may be too late for the employee to ask for his job back.

Failing to Accept an Employee’s Notice of Resignation on the Terms Offered Triggers a Wrongful Dismissal

Consider the following fact scenario: an employee provides his employer with six months notice of his resignation. The employer, rather than accept the six months’ notice offered by the employee, responds by informing the employee that it is “accepting his resignation” and that his last day of employment will be in two weeks and, at that time, his benefits and compensation will cease.

In this fact scenario, the employer did not accept the employee’s resignation. Instead, the employer terminated the employee’s employment without cause. The employee did not resign from his employment. He was wrongfully dismissed.

The Ontario Court of Appeal considered a similar fact scenario in Oxman v. Dustbane Enterprises Ltd.¹¹Oxman v. Dustbane Enterprises Ltd., 23 C.C.E.L. 157; and held that if the offer of resignation is not accepted as offered, which in the example above would include a 6-month notice period, its acceptance is not binding on the employee. The employer, by purporting to accept the employee’s resignation on different terms than that offered by the employee, will terminate the employee’s employment. Rather than a resignation, the employee will have been wrongfully dismissed therefore, will be entitled to reasonable notice of dismissal.

In Oxman the Court of Appeal awarded the dismissed employee with six months notice of dismissal, which was the notice of resignation period provided by the employee.

Wrongful Resignation: Failure to Provide Reasonable Notice of Resignation

An employee who intends to resign must provide his or her employer with reasonable notice of resignation.⁶ If the employee does not provide the employer with sufficient notice of resignation the employee may be liable for damages for wrongful resignation.

Contrary to popular belief, two weeks’ notice of resignation may not be sufficient notice of the intention to resign. The notice that an employee is required to given an employer of his or her resignation is a function of that employee’s position with the employer and the time it would reasonably take the employer to replace the employee or otherwise take steps to adjust to the loss.¹²Gagnon & Associates Inc. et. al. v Jesso et. al., 2016 ONSC 209 at para. 39;

Alternatively, the required notice of resignation may be set out as an express term in the employee’s employment contract.

If a wrongful resignation has occurred, the employer is required to take reasonable steps to mitigate its damages. The court will calculate the damages suffered by employer by determining the loss suffered by the employer because of the employee failing to provide reasonable notice of resignation, not the costs of replacing the employee.

An example of a wrongful resignation is the 2016 decision Gagnon & Associates Inc. v Jesso.¹³Gagnon & Associates Inc. et. al. v Jesso et. al., 2016 ONSC 209; The court considered the case of a top sales person, responsible for approximately 30% of the company’s sales, who resigned without notice to go work for a competitor.

The court found that the employee should have given his employer two months notice of resignation. The trial judge wrote at paragraph 40:

Although Jesso was a salesperson with no managerial responsibilities, he was a senior employee with ten years’ experience and was responsible for a significant percentage of GA’s sales. The evidence at trial established that the market for experienced HVAC salespersons was limited and that a replacement hire could not be made until September of 2006. In addition, Jesso knew that Comeau, the other senior salesperson would be leaving GA on the same day thereby putting GA in a significantly difficult position. In these particular circumstances, a notice period of two months would have been appropriate.

The judge award the employer $35,164.00 in damages for wrongful resignation representing the loss in sales that resulted over the two-month period following the employee’s resignation.

An employee who has been constructively dismissed the employee is not required to give the employer notice of resignation.⁹ That said, an employer may respond to a wrongful dismissal lawsuit in which the employee claims constructive dismissal be initiating a counterclaim against the former employee claiming wrongful resignation. This type of counterclaim is often initiated as a tactic to place psychological pressure on the dismissed employee rather than a claim that has a reasonable prospect of success.

In Consbec Inc. v. Walker,¹⁴Consbec v Walker et al, 2016 BCCA 114; the British Columbia Court of Appeal found that an estimator with 5 years of service should have given one month’s notice of his resignation instead of walking out immediately. However, the damages suffered by the employer because of the plaintiff’s failing to do so were offset by what the employer saved in not having to pay his salary during that period.

Resigning After Being Provided with Working Notice of Dismissal

An employer has the right to provide an employee with working notice of the employee’s dismissal by providing the employee with notice that the employee’s employment will end at a specific date in the future.

If the employee resigns during the working notice period, the employer’s obligations will come to an end if the employer has provided the employee with sufficient notice of dismissal.

However, if the employer has provided the employee with insufficient notice of dismissal the result will be that the employer will have constructively dismissed the employee entitling the employee the right to claim damages for wrongful dismissal.¹⁵Giza v. Sechelt School Bus Service Ltd., 2012 BCCA 18; The dismissed employee’s claim for damages will the reasonable notice period will be reduced by the working notice period provided the employee.

Giza v. Sechelt School Bus Service Ltd.¹⁶Giza v. Sechelt School Bus Service Ltd., 2012 BCCA 18;< is an example the legal impact of an employee resigning after the employer has provided inadequate working notice of dismissal. The plaintiff was 62 years old and had 5 years of service as a bus driver with the company. His employer informed him that he was being provided with 5 weeks working notice that it was terminating his contract of employment. The plaintiff, rather than continue to work through his notice period and, at its conclusion, commenced a claim for wrongful dismissal, immediately resigned from his employment. The trial judge found that the employer, contrary to allegations made by the plaintiff, had not acted in bad faith during the dismissal.

Justice Chiasson, writing for the British Columbia Court of Appeal, held that even if the employee repudiated the contract by leaving the employer when he received the termination letter, he did not thereby forfeit his right to sue for damages because his right to sue for damages had already accrued when his employer terminated his employment without providing reasonable notice. In reaching his decision, Chiasson J. referenced the Court’s decision in Zaraweh v. Hermon, Bunbury & Oke ¹⁷Zaraweh v. Hermon, Bunbury & Oke, 2001 BCCA 524; where Saunders J. observed at para. 31:

Provision of inadequate notice may constitute a repudiation of the contract. Whether it does or not is a question of fact, to be resolved on the evidence of the circumstances accompanying the provision of the notice.

Chiasson J. referenced the fact that the trial judge had held that the employer’s conduct did not constitute constructive dismissal and that the Court of Appeal must give deference to that finding of fact. The Court found that the employee’s reasonable notice period was 6 months but deducted 1 month because the employee refused to work during the 5 week notice period provided by the employer.

Ontario residents should be aware that at the conclusion of the working notice period qualifying employees will also be entitled to collect severance pay pursuant to s.52(2) of the Employment Standards Act, 2000. The severance pay will be 1 week’s regular wages for every year of service up to a maximum of 26 weeks pay. An employee who has been given written notice of termination can resign and continue to keep the right to statutory severance pay. To keep this right, the employee must give the employer two weeks’ written notice of his or her resignation. The resignation must also take effect during the statutory notice period (the statutory notice period is 1 week per year of service up to a maximum of 8 weeks).

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