Canada: Resignations: Will I Stay Or Will I Go?

When it comes to resignations, the facts matter and the decision of Nagpal v. IBM certainly proves it. In another notable case on resignations in Ontario, Schabas J. had to determine whether an employee's failure to return to the workplace after his disability benefits were denied amounted to voluntary resignation or abandonment of employment.

This case also deals with some interesting issues of when policies can be incorporated by reference but that is a topic for another day.

The Facts

The facts were relatively straight forward. Nagpal commenced employment with IBM in 1988. In January 2012 he was a promoted to a leadership position on two new projects. He experienced difficulties with one particular employee in his new position. Over the course of 2012 he began taking more absences and requesting additional support from his superiors in dealing with the problem employee. In January 2013, he received a poor performance evaluation. Nagpal's prior reviews had been excellent. He called in sick on March 14, 2013 and his doctor recommended he take 6 weeks off due to stress. Nagpal never returned to work.

Nagpal was initially approved for short-term disability benefits under a group plan with Manulife. The Policy paid 100% of benefits up to 26 weeks. The Policy stipulated that if benefits were denied, the employee had two options: Appeal or return to work. If an employee did not appeal, or return to work, the Policy deemed the employee to have voluntarily resigned their position.

Manulife denied ongoing STD benefits on July 19, 2013. Nagpal was advised of the option to appeal but was reportedly told there was no point if there was no further medical documentation available. He never appealed.

On July 22, the employer wrote to Nagpal advising he could either return to work or appeal the denial as per the Policy. On July 29, Nagpal obtained counsel who wrote to the employer advising Nagpal was not capable of returning to work and would consider an "exit package". This letter was ignored.

Over the next several months the employer maintained its position: return to work or consider your employment at an end. Nagpal's lawyer continued to maintain that he would return when medically cleared. Nagpal did not return to work. On October 9, 2013, the employer advised Nagpal that it considered his employment position to have been abandoned. Nagpal brought a claim for wrongful dismissal. The employer alleged he had voluntarily resigned/abandoned his position or that the contract of employment had been frustrated.

On summary judgment, Schabas J. found that Nagpal did not resign or abandoned his position. He noted that resignations and abandonment must be clear and unequivocal. The facts, according to Schabas J., supported neither. He found that while Nagpal did not return to work (and had not at the time of the motion) his representations that he was not abandoning his employment could not be ignored. It was evident from Nagpal's ongoing correspondence that he did not intend to resign. Schabas J., found that the Policy's term of deemed voluntary resignation was not determinative of the issue and was not incorporated by reference into Nagpal's contract of employment. Finally, Schabas J. rejected the argument that at the time of dismissal Nagpal's employment had been frustrated. He declined to put any weight on the fact that Nagpal continued to be unemployed at the time of the motion. Instead, he reminded the parties that only evidence that was available at the time of the termination should be considered when addressing frustration. The judge found there was insufficient evidence to prove that there was no reasonable prospect of Napgal returning to work in the foreseeable future. Accordingly, frustration was not made out.

Interestingly, as neither party made submissions on the appropriate notice period, Schabas J., ordered a trial on the issues of damages alone, under Rule 20.04 of the Rules of Civil Procedure.

Take-Away

This is the third notable Ontario decision dealing with the issue of clear and unequivocal resignations in the last several months. Two previous Ontario Court of Appeal decisions in Theberge-Lindsay v. 3395022 Canada Inc, and English v. Manulife, both addressed the factual matrix required for a "clear and unequivocal" resignation. The common thread is the Courts are reinforcing that the facts matter, especially in light of more senior employees. In the present case, Schabas J., specifically noted that a 25 year service employee was entitled to further investigation by the employer before taking the firm position that the employee had resigned.

In an age where workplaces are seeing older workers staying on longer, it is important for employers to remember that the burden of proving a resignation lies with them. Courts appear to be placing a high burden on employers to ensure that any resignations are truly clear and unequivocal. Proper documentation and procedures are essential in these situations. In an era when aging long-term employees may be waffling on when to retire, it is important to confirm these intentions in a clear fashion. Otherwise, employers may see themselves on the receiving end of a wrongful dismissal claim for significant notice periods. Although the issue of notice period had yet to be decided, given Nagpal's age, length of service, and character of employment, his entitlement to reasonable notice will undoubtedly be quite high, subject to any limiting contractual terms.

See:Nagpal v. IBM Canada Ltd., 2019 ONSC 4547

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