Sometimes it might not be obvious whether an employee has resigned. For example, what happens if a worker walks out during the middle of a shift? Knowing whether an employee has resigned can have implications, such as whether the employee is owed termination entitlements.

This article looks at what constitutes resignation and some of the implications. We also look at a recent decision of the Superior Court of Justice of Ontario, in which an employee claimed that he was constructively or wrongfully dismissed. At the same time, the employer argued that he voluntarily resigned from his employment in the middle of a shift.

What constitutes resignation?

For a resignation to be valid and enforceable, it must be clear and unequivocal. This means that it must objectively reflect an intention to resign – the test is whether a reasonable person would have understood that the employee resigned. This is a fact-driven assessment, and the surrounding circumstances’ totality is relevant.

Courts have accepted that a resignation during a spontaneous outburst in highly charged emotional circumstances can undermine its essential voluntariness. Therefore, in some cases, the employee’s conduct may be sufficiently ambiguous that it cannot be objectively construed as a voluntary resignation.

Furthermore, an employee may retract a resignation provided that the employer has not relied upon it to its detriment.

Why does it matter whether an employee has resigned?

An employee resigning has different effects than an employer terminating an employee, so the characterization is important. 

Employer is responsible for payment if the employee is terminated

If an employer terminates an employee without just cause, they are entitled to reasonable notice or pay in lieu of notice. We recently reported on how the length of this period is calculated. The employee might be entitled to other things, such as severance pay. These do not apply if an employee has voluntarily resigned.

However, if an employee resigns following a situation that warrants a constructive dismissal claim, this is not a voluntary resignation. This may occur, for example, if the employer makes a significant and unilateral change to the employment relationship. In such circumstances, the employee will be entitled to a remedy, which is typically paid in place of reasonable notice and severance pay, if applicable and warranted. Employees may also be entitled to retain benefits for the duration of the reasonable notice period and unpaid compensation, such as bonuses or commission.

Employee liable for damages?

Employees are entitled to resign from their employment but need to provide reasonable notice of their resignation. This is to give the employer time to hire and train a replacement.

The Employment Standards Act 2000 does not set out minimum notice periods for employees. It might be set out in the employment contract. Factors considered by courts that influence the length of the notice period include:

• the nature of the employee’s position and the area of work that the employer was competing in;
• the length of time it would take to recruit and train a replacement; and
• the salary and length of service of the employee.

Failure to provide such notice may give the employer a claim for damages. The employer must prove loss and that they have attempted to mitigate it. It is possible that the employer may have other claims, for example, for an employee’s breach of the employment contract or fiduciary duty.

Employee verbally resigns and executes written confirmation in the middle of a shift

In Miller v Ontario Potato Distribution Inc., the plaintiff employee was employed for 11.5 years in a manual labour position at the defendant employer’s potato farming and distribution business in Cambridge. 

He verbally resigned his employment in the middle of a shift and executed a written confirmation of his resignation. He later asked for a “buy-out.”

The plaintiff commenced an action for constructive dismissal. He argued that he resigned following a threatening incident that made him feel unsafe and that he executed the written confirmation under duress. Specifically, the plaintiff claimed that his supervisor sent him to the car park at 3 am. He was threatened by an unidentified man wearing a trench coat concerning texts that he sent to the day shift supervisor two weeks previously complaining about having his benefits cut off. 

Court finds no constructive dismissal and that the plaintiff voluntarily resigned

Justice Broad accepted the defendant’s version of the events, finding that the plaintiff had not proved that the threatening incident took place and that the defendant had any role in it. As there was no other evidence led to support the existence of a hostile work environment, there was no basis for finding that the plaintiff was constructively dismissed. 

His Honour found that the resignation was not part of a spontaneous outburst in highly charged emotional circumstances because there was no proof that the threatening incident had occurred. As a result, there was nothing to suggest that the resignation was not voluntary or that the plaintiff was under duress. 

His Honour felt that the plaintiff’s subsequent conduct was consistent with the belief that he had effectively resigned. The fact that he later asked for a “buy-out” implied that he knew his employment had ended. At no point did he seek to resile from or withdraw his resignation.

As a result, Justice Broad held that the plaintiff had voluntarily resigned his employment. His Honour dismissed the plaintiff’s action. 

Contact Haynes Law Firm in Toronto for Guidance on Employee Terminations

The team at Haynes Law Firm in Toronto helps employers in multiple industries to manage employer risk and reduce liability concerning employee terminations. We work with employers across the country to limit their exposure to legal claims stemming from poorly executed terminations. We also assist employees that have been terminated to ensure they receive maximum compensation and all eligible benefits from their employers.

Haynes Law Firm helps employers and employees throughout Ontario achieve effective solutions to legal issues and conflict management in employment law and civil litigation. To discuss how our employment law team can assist you, please contact us online or call us at 416.593.2731.