What happens when an employee tries to withdraw his or her resignation?
This is a question that I received twice last month from two different companies and for the same reason: employees did not receive a Christmas bonus and they both decided to quit in a fit of anger. My question to both clients was the same: why would they not tell their employees, who are used to receiving bonuses, that they would not be receiving bonuses this year? (Especially where their contracts call for it.) Could you blame these employees for being upset? Do we not know by now that a lot of employee pre-spend their bonuses on vacations and home renovations, etc? Most employees really count on a bonus, and when it does not come through things can and probably will get messy.
My obvious advice was to tear up their resignations—keep the peace and status quo—which led me to do a bit of research on the law of resignation.
What is a valid resignation in the world of employment law?
The above resignations were not really valid resignations. I have long been the type of lawyer who has tried to clear the mist and really simplify issues. This one is obvious. Employers should never accept resignations from employees that are upset. It simply casts a “wider net of possible financial exposure” if things turn nasty. In other words, judges or juries probably won’t sympathize with the issue of resignation acceptance if the employee is genuinely and legitimately upset (not because someone misplaced their red stapler).
So what really constitutes a valid resignation?
1. There needs to be a voluntary offer to resign and an acceptance of that resignation
By law, companies cannot demand a resignation, but cases have been put to our courts about companies giving “offers to resign” that the courts have found enforceable. This normally happens when the option is put to either “quit or be fired for a really good reason.”
Where there are concerns about an employee’s performance (especially more senior and executive-type roles) our courts have found that it was technically not “inappropriate” for the employer to ask the employee to choose between resignation and dismissal for just cause. The employer must however give the employee proper consideration time. The more senior the employee, the more likely a court will find that he or she has the necessary knowledge to make an informed voluntary decision.
2. Both an offer to resign and an acceptance must be clear and unambiguous
The case of Kieran v. Ingram Micro Inc. (2001) illustrates this principle. There were two employees in line for a promotion. Employee B told the company that if employee A got the job, he (B) would resign. A and B didn’t like each other and B basically suggested that he couldn’t work for his colleague, A. When employee A got the job, employee B tried to withdraw his resignation. The company rejected this and argued that it did not make business sense to allow the two men to work together, especially after employee B had publicly announced his inability to work with employee A.
The Court sided with the company and ruled the company was not obligated to accept the withdrawal of resignation. The withdrawal was based on entirely on personal reasons. Together with the fact that the ill will between the plaintiff and the new president was generally known, the Court decided that these facts justified the employer’s rejection of the plaintiff’s attempt to withdraw his resignation. The Court of Appeal overturned the decision, finding that employee B’s statements were not sufficiently clear and unequivocal to amount to a resignation from employment in the first place.
3. An employee is to provide reasonable notice to resign, just as an employer must give reasonable notice of its intent to terminate the employment relationship
The main reason for this is to allow the employer to hire and train a replacement. Courts have found that the notice of resignation owed by employees is less than that required by employers upon the dismissal of an employee, unless the job is highly specialized and requires a significant amount of on-the-job training. Employers can seek damages from their employees for wrongful resignations if the employee fails to provide adequate notice of departure. Along with this, however, applies the same requirement of mitigation: employers may also be subject to the duty to mitigate their losses arising from the wrongful resignation of its employees.
If an employer accepts a clear and unambiguous resignation but asks the employee to leave immediately, the employer will have effectively turned the resignation into a wrongful dismissal. An employer should accept the resignation as offered in order to terminate the employment relationship. The way to resolve this is to refuse to allow the employee to work during the notice period, but continue paying wages for that period.
What constitutes a valid resignation will ultimately depend on the factual circumstances of the event in question. However, the key points enumerated above can serve as a catalyst for discussion with counsel if you ever need to discuss the validity of a resignation. The ultimate question is objective; i.e., would a reasonable person have understood the employee to have resigned? The above is not exhaustive of all the legal tests or all of the legal problems that can occur within the context of employment law. Like any other areas of law, there are hundreds of cases and hundreds of factual circumstances that can catalyze a problem.
Matt Lalande
Personal injury, disability and employment law
Haber & Associates
905-639-8894
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