Can an Employee Rescind a Resignation?
Here's a question that sometimes comes across my desk: After giving notice of resignation, can employees change their minds and say, "Never mind, I'm not actually quitting after all"?
The answer, as anyone accustomed to dealing with lawyers might anticipate, is "It depends."
The reality is that there's very little case law on this, but the case law that is there, across Canada, tends toward a conclusion that an employee can rescind a resignation at any time before (a) it is accepted by the employer OR (b) the employer relies on the resignation to its own detriment.
Technically, if an employee says "I quit", and the employer responds immediately with "I accept your resignation", it looks like the employment relationship is over - at the employee's instance, meaning that no dismissal liabilities (termination pay, severance pay, pay in lieu of notice, etc.) are typically owed. But employers are generally well-advised to not put too much weight on technicalities. The difference between 'a voluntary resignation to which an employee is bound' and 'the employer improperly refusing to let the employee return to work' can be the difference between the employee getting absolutely nothing and the employee getting very substantial entitlements.
The Law
The best case on this is a decision from the Nova Scotia Court of Appeal in Kerr v. Valley Volkswagen: The employee gave the employer an ultimatum that he wanted a raise or he would quit. After giving the employee a period of time to reconsider, the employer accepted the resignation. The employee argued that the employer couldn't hold him to the resignation unless it could prove detrimental reliance; the court did not accept this argument.
The court noted that the ultimatum was not given rashly or impetuously, and the employer did not act harshly or opportunistically in accepting the resignation.
Kerr has been followed a couple of times in Ontario. Once, in English v. Manulife, the Ontario Court of Appeal overturned a decision that followed Kerr - but did so on the basis that the resignation itself was equivocal in the first place. (Frankly, I think the fact-pattern in Kerr was vulnerable on this basis, too: Mr. Kerr was said to have demanded a raise "or I'm gone", continued to attend at work over the next three weeks, and then was walked out at a time and date of the employer's choosing. This employer choice is clearly doing more work than merely giving effect to any resignation communicated by Mr. Kerr. That said, factual issues aside, the law in Kerr is persuasive.)
There's a lot of discussion, in the broader literature and the case law, supporting the legal analysis in Kerr, though cases that reach its outcome are actually quite rare. From a strict 'theory' perspective, an employer is generally able to accept and rely upon a resignation; but from a practical perspective, courts are quite willing to find on specific facts that a resignation was not really offered in a way that it could be relied upon.
The Distinguishing Cases
In Avalon Ford Sales, the Court of Appeal of Newfoundland and Labrador considered a scenario where, following a tense meeting with management in respect of a significant inventory control problem, the employee experienced a medically-documented acute stress reaction and handed in his keys and company phone and said "I'm done". The employee tried to contact management afterward, and eventually went to the workplace with a doctor's note asking for a medical leave. The manager ripped up the note and told him to leave. The trial judge found that the resignation was neither voluntary nor unequivocal, and that acceptance of the resignation breached the employer's good faith obligations. Effectively, the trial judge found that there is an obligation to give the employee time to resile before accepting a resignation.
On appeal, the court (notably including Justice Rowe, prior to joining the SCC) upheld most of the findings, while disagreeing with the trial judge's conclusion that there's a free-standing obligation to give a grace period. The 'organizing principle of good faith' could inform the specific expectations of the parties in a specific relationship, but didn't create such a broad rule.
(Also, while handing in your keys and saying "I'm done" might seem pretty unequivocal to me, it's a question of fact entitled to deference, and the Court of Appeal asked whether the totality of the circumstances made it reasonable for Avalon to conclude that the employee had resigned - making the specific finding, on those facts, a deeply contextual one.)
Along similar lines, there are a number of 'heat of the moment' cases where a resignation tendered in a moment of upset have not been found to bind the employee. This was the case in Turner v. Westburne Electrical in Alberta: The employee tendered his resignation in a difficult moment, it was not immediately accepted, and it was rescinded thereafter. The trial judge found on the facts that the employee never really intended to resign. (The absence of a written resignation letter contributed to this finding, as did the fact that the employer later asked for a written letter of resignation.)
There are other conditional resignations, very much like that in Kerr, where the resignation was found not to be unequivocal - like Cranston v. CBC, where the employee said he'd quit if he was forced to meet with a particular network official.
Factors to Consider
So from a narrow black-letter-law perspective, an exchange of "I quit" and "We accept your resignation" looks like it should be the end of the conversation, but it isn't. Courts may bend over backwards to find that the resignation wasn't voluntary (constructive dismissal, etc.), or wasn't unequivocal, or was subject to some expectation (on the facts and in the overall context of the employment relationship) that there would be a grace period to reconsider.
Here's a non-comprehensive list of the things the courts will look at when deciding whether an employer is entitled to accept and rely upon an employee's resignation:
Written Notice
There is no requirement that a resignation be in writing. But taking the time to put it in writing makes it more likely that a court will find that the employee actually intended to resign.
Circumstances of Resignation
A court is less likely to want to hold an employee to a resignation decision made brashly and without an opportunity to consider it. 'Heat-of-the-moment' resignations attract a particular degree of flexibility from courts.
However, this doesn't mean that an employer is obligated to turn a blind eye to the inappropriateness of other conduct surrounding the resignation. Behaving in an unprofessional manner, going home in the middle of a workday, etc., can attract discipline - in some cases extending to just cause. Furthermore, particularly where there's misconduct associated with the resignation, the manner in which the employee rescinds the resignation may be significant.
For instance, in Avalon where the employee came back seeking a disability leave to which he was entitled, that gave him a compelling case and made him a very sympathetic plaintiff. If, on the other hand, the rescinding of a resignation comes with terms to which the employee is not entitled - demands, ultimatums, etc. - then I'd suggest that it's not really a rescinding of the resignation, but rather an attempt to negotiate a new and modified contract, in a way that the employer has no free-standing obligation to accommodate.
Passage of Time
Where an employer immediately accepts the resignation, and the employee seeks to rescind it shortly afterward, that's far less likely to bind the employee than a case where the employer gives a period of time to take it back.
Surrounding Communications
A resignation letter accompanied by a statement of "I don't know if this is really want to do" is less likely to bind an employee than a resignation letter accompanied by "I've put a lot of thought into this...."
Bona Fides
This, I think, is really what the whole analysis is trying to get at: Is the employer's acceptance of the resignation a good faith acceptance - bringing closure because on its genuine belief that the employee really intends to leave and isn't going to change their mind?
Or is the employer jumping on an opportunity - slam the door the moment the employee steps outside, to make sure they don't try coming back?
Why WOULD an Employer Accept a Resignation?
It's a rather unusual facet of employment law that either side is completely empowered (practically, if not generally contractually) to unilaterally end the relationship at any time.
When an employer fires an employee, the employee doesn't get to say "No, I insist on you performing the contract, and therefore I'm staying at my post." Conversely, if an employee resigns, the employer can't compel the employee to stay. In either event, they may have liability if the termination isn't conducted in a manner that complies with contractual obligations, but specific performance isn't available for these types of obligations.
So a notice of dismissal or resignation wouldn't generally be seen as inviting a response from the other party: You're not asking; you're telling.
So it doesn't seem to me like there's any obligation to explicitly accept a resignation, nor do employers have any ability to prevent employees from leaving, and the only reason to accept a resignation would have to be to lock the employee into its effect - presumably either because you don't want the employee anymore anyways, or because you intend to rely on the resignation by taking steps to move the work and/or hire a replacement.
Personally, I wonder about facets of the analysis in Kerr: It's framed as an offer/acceptance issue, in a way more suited to the formation of a contract than its termination. Because neither party requires the agreement of the other to bring the relationship to an end, I query whether it's fair to treat a resignation as an 'offer' in the contractual sense, and unless the employer is seen as ceding something by accepting the resignation, it's hard to see the exchange as having any consideration.
And whether the employer is ceding anything by accepting a resignation...is a genuine question.
Employees are generally obligated to give notice of resignation. The adequacy of that notice is often uncertain, and if the employer can point to losses due to its inadequacy, the employer can seek to recover those losses from the employee.
This almost never happens. There's very little case law about the amount of notice they are required to give, and significant philosophical disputes as to the guiding principles. But, at least in theory, the employee's obligation to give notice, and the employer's right of recovery of damages flowing from the breach thereof, are well-established.
To my mind, there's an argument as to whether 'I accept your resignation' waives that right of recovery - in the sense of accepting the adequacy of the resignation.
The language of 'acceptance' could be in the nature of accepting a repudiation, which would ordinarily extinguish rights of specific performance and preserve a right of action for damages...but since there's no right of specific performance here, that's not really an appropriate analysis.
In the broader scheme of resignation law, there's a logic to treating the acceptance of a resignation as a substantive consent to termination on the terms set out in the resignation, waiving any damages that might flow from inadequate notice: The employer locks the employee into the effect of the resignation, in exchange for agreeing to bring the contract to an end on a consent basis and waiving any damages that might flow from the resignation otherwise.
I'm not entirely convinced that this squares all that well with the first principles of contract law and the practicalities of what a resignation is, but there's some sense to the compromise.
Side Note: Waived Notice Periods
There's a common practice, especially in certain industries, of walking a person out the door immediately upon resignation, usually paying the employee through to the end of the notice period. There are several reasons for this - some more legitimate than others.
In the UK, this is apparently called "garden leave". I haven't really heard a similar term used much in Canada, but I think 'garden leave' is an appropriate way of capturing the phenomenon.
There's not a lot of case law on this, and the legal mechanics of exactly what's going on...are grey. There was a Quebec case, Asphalte Desjardins, a few years ago where the employer tried to waive the employee's notice without paying them; the SCC concluded that this was not permissible - and the attempt might have actually increased the employer's liability to a 'dismissal'-based remedy, had the employee asked for it. (Quebec's legal framework is different from other Provinces, but there are likely to be parallels.)
From a practical perspective, I don't think that an employer is ever likely to end up in trouble for sending an employee home through a resignation period, as long as they extend the employee's full compensation package to the end of that period. But from a doctrinal perspective, I'm not sure they're entitled to do so.
If an employee gives notice that "this employment contract is terminated, effective four weeks from today", there's no legal doctrine that allows an employer to expedite that termination. If the employer responds by terminating the contract with an earlier date, then that would put us into a 'dismissal' framework. And while, at common law, the employer's liabilities flowing from that dismissal would usually be capped by the employee's own resignation, employment standards legislation creates a bit of a hiccup: The act of termination by the employer can, in many cases, trigger statutory obligations upon the employer that are not limited by the employee's resignation.
However, if we instead perceive it as a 'paid leave', where the employee is still notionally an employee until their own resignation date, that's a different story. The employer hasn't terminated the contract, but just waived its own expectation of performance by the employee.
Still, I'm not convinced that an employer really has the right to do that. The value of a 'job' to an employee goes beyond the remuneration itself, but also extends to the work itself - the opportunity to gain experience, prestige, and a sense of personal accomplishment: This is part of why a demotion can be a constructive dismissal even without a reduction in compensation. So I'm broadly doubtful that an employer has a 'right' to waive employee performance in this way.
However, it's likely a contractual breach with no remedy: If the employee is getting their full compensation through that period, I think you'd need a really extraordinary fact pattern to say that to say that any additional damages vest to the employee.
There are other implications of perceiving 'garden leave' as a period of continued employment, however: If that's the case, then the employee still owes duties of loyalty and fidelity to the employer through that period. The biggest difference is likely to arise in a question of whether the employee can go over to the competition during the waived notice period.
Resignation FAQs:
- "If I give an absurd amount of notice, and they walk me out the door, do they have to pay me for the whole notice period I gave?" The answer to this is that the employer's entitlement to dismiss, on notice, remains intact: If the resignation notice period is longer than whatever notice period the employer would have to give for dismissal, the employer can simply engage its own right to dismiss, instead of providing 'garden leave'.
- "I'm going to get a big annual bonus on June 30. If I give three weeks' notice of resignation on June 11, effective July 2, can the employer send me home and refuse to pay the bonus?" The case law suggests that, at least in most cases, an employee on garden leave will still be entitled to the bonus they'd have received had they actually been in the workplace when the bonus was paid out. Still, it's far better to have the cash in hand than a claim you can pursue in court - so if you can wait until after the bonus is paid to give notice, that's usually preferable. (For this reason, some organizations often see a wave of resignations after paying out the annual bonus - people were hanging on just long enough to get the bonus.)
- "Notice of resignation is just a courtesy, isn't it? Something to protect a positive reference?" No. Most employees have to provide some notice of resignation, as a matter of an implied (or express) contractual obligation.
- "Isn't there a rule about "two weeks' notice" to resign?" No. For some employees, such as front-line retail or fast food workers, I'd think that 'two weeks' is often going to be more than they need to give. For higher-responsibility workers, they'll often have to give more notice than that. However, as I noted, this is both a fact-based analysis and a question that engages some contentious issues in employment law.
The Bottom Line
For employees, the suggestion I would give is: Don't quit unless you mean it. Voluntary resignation puts you into a zero-recovery scenario, and while there may be arguments around that, it always weakens your bargaining position to have that risk.
But for employers, the advice is more complex: Don't jump too quickly to accept a resignation, particularly if you think there's some question as to whether the employee's intention to quit is settled. Especially if you want the employee gone, and/or you're concerned about the possibility of the employee rescinding the resignation, you should be careful about ensuring that the employee has the opportunity to think about it and rescind it before you accept it.
In fact, I don't see much compelling reason to provide an 'acceptance' of a resignation at all, under most circumstances - at least, not until and unless you're in a position to undertake a major commitment in reliance on the resignation, such as hiring a replacement. If you do 'accept' a resignation, or put the employee on 'garden leave', you may be compromising any claim to damages from inadequate notice. Arguably.
In events like Kerr or Cranston, where an employee makes a threat to quit unless some demand is satisfied, then - assuming they're not entitled to the thing they're demanding - the safer route is to refuse the demand and let them leave in response. To the extent of any insolence and insubordination in the course of that threat, it may be appropriate to consider discipline for the employee for such misconduct.
If, following acceptance of a resignation, the employee indicates a desire to return to work, get legal advice - right away.
*****
This post does not contain legal advice, but only general legal information. It does not create a solicitor-client relationship with any readers. If you have a legal issue or potential issue, please consult a lawyer.
Comments
Post a Comment