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The thin legal line: Resignation vs termination #learnthelatest

resignation“Employers who are not careful to ensure that resignations are voluntary and final could face significant damages awards if the resignation were found ineffective, particularly for long-service employees.”

Has an employee who hands over his keys and company cell phone to his employer and declares “I’m done” resigned their employment? The Newfoundland and Labrador Court of Appeal has said that, in at least one case, the answer is no.

The law of resignation

A resignation is only effective where the resignation is clear and unequivocal. The resignation must objectively reflect an intention to resign or conduct evidencing such an intention.

In addition, courts have been lenient with employees who resign from employment in a moment of heated passion. Courts have found that, unless an employer detrimentally relies on an employee’s resignation, the employer ought to provide an opportunity for an employee to rescind their resignation within a reasonable period.

If a resignation is ineffective, the employment contract remains in force. This means that employer actions, such as refusing to allow the employee to return to work, may constitute a dismissal.

Avalon Ford Sales v Evans

The employee in Avalon Ford Sales (1996) Limited v Evans was responsible for inventory at a car dealership. Due to a mistake for which he was responsible, a car was sent directly to a customer and the dealership was not paid for several months.

Even though the dealership was ultimately paid and the mistake was fully corrected, a meeting between the employee and management concerning the situation became extremely tense and confrontational. During this meeting, the employee had what doctors later termed an “acute stress reaction.” He left the dealership, handed his keys and cell phone to a manger, and told the manager “I’m done.” Calls from the manager to the employee went unanswered.

Eventually the employer and the employee had a meeting where the employee provided a medical note supporting a stress leave claim. Management tore up the note, and told the employee to leave the premises and not to speak to anyone. The manager accused the employee of abandoning his position.

The question before the Court ultimately came down to whether the employee had resigned his employment. The Court of Appeal found that the decision to resign was made while the employee was under significant stress. The stress was particularly acute because of what the Court said was the “sensitive” disposition of the employee.

As a result of these circumstances, the resignation could not be truly said to be voluntary, an essential element of a valid resignation.

The Court of Appeal also commented that given the circumstances, the employer could not reasonably conclude that the employee had resigned. This was for two reasons.

First, it may not be reasonable for an employer to conclude that a resignation has occurred when the statements are made in the heat of the moment. In such a case, the employer has an obligation to seek clarification.

Second, and relatedly, the Court found that where there has been a lengthy employment of an employee who has what the Court found was a “sensitive disposition”, an employer cannot reasonably conclude that the intention of the employee was to resign by simply using words such as “I quit.” Again, further clarification is needed to confirm the employee’s intent to resign.

In the circumstances of this case, the Court found that the employee’s resignation was invalid, and that by purporting to accept an invalid resignation, the employer had dismissed the employee. The employee was awarded damages as a result.

What employers should know

It is not uncommon for employees who are under stress or have received negative performance reviews to make declarations to the effect of “I quit” or “I’m done.” Employers should be cautious about accepting these declarations at face value. As this case shows, courts are receptive to employees who attempt to step back from these emotional outbursts and rescind their resignation. Employers who are not careful to ensure that resignations are voluntary and final could face significant damages awards if the resignation were found ineffective, particularly for long-service employees.

To learn more about the factors courts use to decide whether an employee’s resignation is effective, register to Learn the Latest® at the Ontario Employment Law Conference.

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Stringer LLP

Employment and Labour lawyers at Stringer LLP
Stringer LLP is a leader in Canadian HR law. For over 45 years, they have taken a client-centered approach to responsive service, representing employers with labour relations and employment problems. Their firm’s practice covers a broad spectrum of HR law, including employment law, occupational health & safety, labour relations and arbitration, human rights, workers’ compensation and pay equity, as well as issues under the Accessibility for Ontarians with Disabilities Act. They also provide training, seminars and conferences on the above topics. Read more
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