Much of employment law centres on wrongful dismissal litigation. Wrongful dismissal arises when an employer has terminated the employment relationship and failed to provide sufficient advance notice or pay-in-lieu to the affected employee. Less well known is the corollary of wrongful dismissal: wrongful resignation. Just as employers are obligated to give notice prior to terminating the employment relationship, so too are workers.
The amount of notice that employees must provide in advance of their resignation varies. As a starting point, look to any written employment agreement. If this document specifies a set resignation notice requirement (such as four weeks’ advance notice) that will normally govern. If no written notice of resignation has been agreed, then a term requiring “reasonable notice of resignation” will be implied into the employment relationship.
Reasonable notice of resignation will be quite minimal for most workers. Somewhere between 2-4 weeks of notice may be sufficient. However, for workers holding critical roles (such as C-suite staff, key salespersons, etc.) the obligation to provide notice of resignation may be much greater. In one Ontario decision, for instance, a long tenured vice-president of a marketing company was found to owe her employer six months’ advance notice of resignation.
The perils of wrongful resignation litigation
Many employees fail to provide their employers with much, if any, advance notice of resignation. Yet claims of wrongful resignation are rarely litigated in Canada. The reason for this discrepancy stems from the issue of damages.
Employers often (incorrectly) assume that if workers fail to provide proper notice of resignation, they can withhold pay or seek to claim damages equal to the workers’ wages during the period of notice that ought to have been given. Damages for wrongful resignation, however, are narrowly cast. They only arise where an employer can prove loss that directly arises due to the worker’s failure to provide sufficient notice.
Such loss cannot include costs to hire a replacement; these would be incurred even if proper notice of resignation was provided. Likewise, any loss suffered by an employer must be set-off against savings that come from not having to pay the worker their wages during the resignation notice period.
In 2024, we have two new examples[1] of the perils that come with pursuing claims of wrongful resignation. Both involve the same British Columbia based insurance company.
This employer sued two workers who resigned in 2022 and failed to provide 3 weeks of advance notice, as was required by the parties’ written employment agreements. As a result of these wrongful resignations, the employer commenced legal action and claimed damages equal to 3 weeks of the workers’ regular pay.
When these related cases came before the British Columbia Civil Resolution Tribunal, the employer lost both due to the same reason: its failure to prove loss.
As explained in one of the decisions:
Here, JFIA has provided no evidence or submissions about how it determined it lost $3,000 due to Mr. Mehta’s resignation. I infer JFIA claims $1,000 for each week of notice. However, JFIA provided nothing at all to support that claim, such as records of the revenue Mr. Mehta brought in for JFIA or evidence from clients who chose not to do business with JFIA due to Mr. Mehta’s sudden departure. Without any evidence, I am unable to determine JFIA’s damages and I dismiss its claims. [emphasis added]
In losing these cases, the employer not only saw its time and effort put into litigation go to waste, but also suffered reputational harm in that its failed claims garnered mainstream media attention.
Takeaways
When planning for resignation, workers should aim to conduct their exit in such a manner that minimizes harm and disruption. This requires consideration of future events and ensuring that sufficient notice is provided so as to not leave an employer hanging at a critical time. Employees should also help facilitate the transition of their duties and knowledge to any replacement. Assuming these steps are taken, it will be hard for an employer to successfully assert a claim for wrongful resignation.
For employers, before rushing to litigate wrongful resignation, consider what actual losses have arisen from the worker’s premature departure. Are they substantive? Would they have been incurred regardless of notice being provided? And do such damages outweigh savings from not having to pay the worker during their notice period? Asserting wrongful resignation will only make sense in limited circumstances and employers should not seek to advance such claims without first obtaining legal advice from experienced counsel.
This article was originally published on February 15, 2024 at First Reference Talks.
Vey Willetts LLP is an Ottawa-based employment and labour law firm that provides timely and cost-effective legal advice to help employees and employers resolve workplace issues in Ottawa and across Ontario. To speak with an employment lawyer, contact us at: 613-238-4430 or info@vwlawyers.ca.
[1] 548981 B.C. Ltd. (dba John Fleming Insurance Agency) v. Mehta, 2024 BCCRT 85 and 548981 B.C. Ltd. v. Reyes, 2024 BCCRT 83.