When is a Resignation Not a Resignation?

If your employer asks you to resign, then it’s probably a firing

Employment issues: Robert Yeager

By now, most people are aware of the resignation of David Dingwall, who, until recently, was the president of the Royal Canadian Mint.

However, like many public departures, the leave-taking may have been a “resignation” in name only. The episode illustrates that just because an employee says he quits, the courts won’t necessarily consider it a voluntary resignation.

At the time of his resignation from the mint, Dingwall was coming under media scrutiny in relation to his expenses and prior lobbying activities. He very quickly resigned after reports were published that he and his top aides racked up expenses of more than $740,000. His resignation was explained to the public by Prime Minister Paul Martin and Revenue Minister John McCallum that Dingwall voluntarily resigned, to spare the mint controversy over his expenses.

Dingwall seemed to support this interpretation when he informed a parliamentary committee he had resigned to spare the mint being thrown into a crisis. The explanation given by both the government and Dingwall led the reasonable reader to conclude that Dingwall had resigned.

A resignation is really just a more sophisticated word for “quit.” It is generally understood that when one quits one’s employment, one is not entitled to any severance package. However, this logic seemed lost on Dingwall, who uttered the now famous and hilariously circular statement: “I am entitled to my entitlements.”

In early February, the Privy Council Office announced a settlement package following a secret decision of an independent arbitrator, George Adams, a retired judge, who apparently ruled that Dingwall had not resigned, as the government and Dingwall suggested and the public was led to believe at the time, but instead had been forced to resign and therefore fired.

As a result, Dingwall was paid a $417,780 severance cheque. Apparently, Dingwall is truly entitled to his entitlements. This result leaves many Canadians scratching their heads. How can one quit and still receive a large severance payment?

The arbitrator’s report or reasons has not been made public. Since both the employment contract of Dingwall and the arbitrator’s reasons remain unpublished and therefore unavailable for review, one can only speculate as to the basis for the ruling. But Dingwall’s situation raises a nice question in general. When a person resigns their employment, under what circumstances are they entitled to their entitlements?

In general, entitlement to severance occurs where one is dismissed. If one voluntarily quits, or as in Dingwall’s case, resigns, generally no severance payment follows. With resignations, a key concept is the voluntariness of the resignation. To be voluntary, a resignation must be clear, unambiguous, unretracted and uncoerced.

A court will review all the surrounding circumstances and ask whether a reasonable person, being made aware of all the facts, would understand that the employee had just voluntarily resigned. Therefore, the key for Dingwall in having his case argued before the arbitrator was to convert what seemed to be a voluntary resignation into an involuntary resignation, otherwise known as a dismissal or firing.

This is not unheard of in the common law. What seemed like resignations to various employers have been viewed as firings by courts. In one such case, a salesman, in a moment of heated discussion, said unless he got his way he would resign, but appeared for work the next day, and found himself locked out. The employer insisted the employee quit, but the court ruled that the employee had not resigned, but had been fired.

In another case, a traveling salesman after a long road trip said to his manager that he couldn’t handle it anymore. The employer took this as a decision to resign, issued a letter to the employee expressing regret for his resignation and asking for a letter of resignation which the employee then provided. The employment then ended. The court found the resignation to be involuntary, because the employer requested the resignation.

In another case, the employee actually cleaned out her desk and left her keys and other paraphernalia of employment on her manager’s desk and left the premises, yet the court found in all the circumstances that there was no voluntary resignation, rather, there was a firing. In another case, an employee, embroiled in a dispute with his employer, announced that he would be actively seeking other employment. In British Columbia, the courts have held that an employee’s announcement or statement of future intentions do not amount to a resignation.

What can be discerned from all of this? Resignations or quittings are not always as simple as they may seem. The court will inquire as to all the circumstances. In Dingwall’s case, his lawyer may have argued that given the potential crisis spurred by media reports of expense allegations, Dingwall was somehow forced to resign because he was asked by his political masters to step down and he did so.

So let Dingwall be the example. You may in fact be entitled to your entitlements.

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