People quit their jobs at various times and for various reasons. Often, when a worker quits his/her job they provide their employer with a written letter or an email confirming their decision to resign on a specified future date with the intention of continuing to work until that date.
Generally speaking, when an individual voluntarily exits the workplace by resigning their employment, the employer is relieved from any obligation to pay severance. As the act of resignation effectively extinguishes a worker's right to seek severance, the courts require that for a resignation to be effective it must be "clear and unequivocal." Put differently, there can be no ambiguity as to whether the individual truly intended to quit his or her job. Where ambiguity does arise in this regard it is likely be resolved in favour of the employee, with the court deeming the cessation of employment to be a termination and requiring that the employer pay severance in accordance with the individual's employment agreement.
Lessons from English v. Manulife Financial Corp.
A recent decision from the Court of Appeal for Ontario, English, dealt with a situation where a senior manager decided to retire as she did not wish to retrain in order to use a new computer system that her employer would be instituting in future.
Accordingly, on September 22, 2016, Ms. English handed a retirement letter to her supervisor, which is stated in part "this will serve [sic] formal notice that I will be retiring effective December 31, 2016."
In response, the supervisor asked Ms. English whether she was sure that she wished to resign her employment, to which she replied "not totally."
On October 11, 2016, Manulife announced that it would no longer be proceeding with instituting a new computer system. The following day, Ms. English then spoke again with her supervisor and advised that as the company would not be changing computer systems, she was withdrawing her notice of resignation. Around a month later, however, Manulife informed Ms. English that it would not accept the withdrawal of her resignation, before instructing her as of December 12, 2016 to not return to work.
Ms. English sued Manulife for wrongful dismissal. On a motion for summary judgment, the court determined that Ms. English's resignation was clear and unequivocal, and once accepted by the employer could not be rescinded.
Ms. English appealed this ruling, which was subsequently overturned by the Court of Appeal. In reaching its decision, the Court of Appeal reaffirmed the general principle in employment law that an employee's resignation must be clear and unequivocal. In this case, the Court determined that the following facts precluded any such finding:
Ms. English made clear that she was "not totally" ready to retire;
She made the decision to retire solely in response to the institution of a new computer system (which ultimately did not occur) and communicated the same to her supervisor at the time of tendering her notice of retirement;
She informed the employer immediately that she did not wish to retire after learning that the computer system would not in fact be changed; and
She was told she could change her mind about her decision.
Having determined that Ms. English had been dismissed without cause, the Court of Appeal then confirmed that 12 months' severance was appropriate in the circumstances.
Takeaways for Ontario Employers and Employees
The court's decision in English serves as an important reminder to employers that while an employee may state their intention in writing to resign from employment, that alone may be insufficient. Employers should conduct a broader inquiry into the circumstances surrounding the decision to resign and the manner in which this decision was communicated by the employee. While it is well-accepted that a "heat-of-the-moment" resignation may be quickly rescinded, English makes clear that an employee may be able to rescind a resignation well-after the fact.
Employees, on the other hand, should be aware they if they intend to rescind a resignation, in the right circumstances it may be possible, but it should be acted upon quickly (and certainly before the employer has relied upon it to its detriment).
Moreover, employees should be cognizant of any contractual obligations they may have when deciding to resign from their employment. For example, your employment agreement may require that you provide a particular period of notice of your resignation. If an employee occupies an important role within an organization, or it will prove difficult to replace the departing individual, this period may be several weeks or even months.
Departing employees should be mindful of any such obligations and be sure to comply with them. Failure to do so may result in unanticipated liability in the form of a claim for wrongful resignation (a topic we have addressed in detail here and here).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.