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Your employee resigns… now what?

By September 29, 2017November 5th, 2019Employment Law

About once a month, a dentist will call our office and say that their long-time Dental Hygienist is going to resign in one week and the dentist is left scrambling. Other times, an employee will tell their employer that they “want a severance package” from their employer.

What is an employer to do?

Dude, Where’s My Two-week Notice?

Unlike an employer’s duty to provide significant notice to their employee if they terminate the employment relationship; an employee does not have the same duty to provide the same amount of notice.  In other words, it is not a two way street.

That is not to say that every single employee in Ontario must always provide the “two week notice” of resignation (which, for the record, is not stated anywhere in the law).  For a more senior employee, or longer tenured employee, or an employee who is harder to replace (think CEO), they may be required to give more than two weeks of notice of their resignation. Unless there is something in an employment contract that deals with the amount of notice to be provided, then the common law (or judge-made law in Ontario) says that an employee must provide “reasonable notice” of their intention to resign.

Look to the Contract

Employers should ensure that they have clear contracts with their team members clearly stating what is the expectation for notice of resignation. Two weeks may be sufficient; but perhaps, for an office manager, you may need more time to find and train a replacement, so you may want to increase the standard two-week resignation notice period. At the same time, employers may want to consider asking the employee to acknowledge and agree that the employer can waive their resignation notice period if the employer so chooses.  That way, the employer is not obligated to keep paying the employee if they don’t need them during their resignation period.

We help employers get all of their team members on written contracts.  But as in the case above, there was no written contract. So let’s say you don’t have a contract with your only dental assistant and they left your practice with no notice of resignation. Technically, if an employee does not provide reasonable notice of resignation, that would be a breach of their verbal contract. But, the question comes down to what damages can the employer actually prove?

It is important to remember that the damages are not costs that come up for the employer because the employee has resigned. In order to have a viable claim, the employer would have to prove it suffered damages specifically due to the employee’s failure to provide the appropriate amount of notice. In many cases, it would be difficult for employers to show proper evidence to win such a case. However, there was a case recently released where an employer was successful in proving those damages.

In the B.C. case of Consbec Inc. v. Walker, (2016 BCCA 114), the employee was a manager and the only employee in the company’s western offices. He worked for 5 years, abruptly resigned in writing and left immediately to compete against his old company.

As a result, the employer had to urgently relocate one of its Ontario employees to BC.  The employer sued the former employee and won because the employer successfully proved that, as a direct result of the insufficient notice given by the employee, the employer incurred costs of over $56,000 (those costs were (1) about $10,000 for the costs the transferred employee incurred to sell his Ontario house, (2) $13,000 for moving expenses, (3) $5,000 for a land transfer tax, (4) $18,000 for the transferred employee’s travel costs, and (5) about $12,000 for the transferred employee’s six-member family to fly from B.C. to Sudbury and back for Christmas [presumably these were all perks in order to have the employee agree to uproot his and his family’s lives]). The employee was ordered to pay back the company for those costs.

This could easily be applied to dentists: a hygienist who abruptly resigns on a day and $1,000 of treatment has to be cancelled; or an assistant, receptionist, or hygienist who abruptly resigns and you have to hire an urgent temporary replacement at a much higher cost than the resigned employee.

A Resignation is not always a Resignation

Warning: if you receive a resignation from an employee, make sure it is a true resignation and acknowledge it as such.  There was a case I just read (from Alberta, Carroll v. Purcee Industrial Controls Ltd, 2017 ABQB 211) where a senior employee told their employer (on several occasions) that he wanted to resign and negotiate a fair severance package (he even offered an amount that he was willing to accept!). Business had been slowing down and the employee wanted out.  Notably, there was no employment contract between the employer and employee.  One month later, the employer told the employee it had accepted his resignation.

The employee sued the employer, saying it had terminated his employment without cause and without reasonable notice and the employee won.  The Alberta Judge confirmed that for a resignation to be effective and binding, it must be both objectively and subjectively clear and unequivocal. For this employee, the resignation was not clear and unequivocal because

“each time [the employee] offered to resign his employment, the offer was coupled with an invitation to negotiate the terms of his departure, including a severance package. There [was] no evidence before [the Judge] to demonstrate that [the employee] ever indicated an intention to resign on a specific date without reference to a severance package.” (paragraph 50)

The senior employee was awarded nearly $150,000.00 from the employer.

So remember, a resignation may not always be a resignation!  It is important to understand the reasons behind a resignation before it is finalized. Even if an employee resigns, the employer may still have to pay.

An additional consideration for employers would be: if the resignation is related to a protection area of discrimination under Ontario’s Human Rights Code, then the resignation may not truly be a resignation.  For example, if an employee says they feel they are being forced to resign because of childcare issues, elder care responsibilities, or medical reasons, it may be an area that an employer needs to accommodate rather than just accept as a resignation.

Lastly, if an employee feels like they are being forced to resign, not because of an area of discrimination, but because they feel the terms of their employment have changed so much that they don’t recognize their job anymore, that could be enough grounds for the employee to sue the employer for wrongful dismissal.

So in summary: resignation may appear to be a cut-and-dry, open-and-closed matter, but there are still many issues that need to be worked out or dealt with before an employer can rest assured they won’t receive a pesky Statement of Claim in their hands.

DMC