Turnabout on the job site is fair play

An employee may need to give reasonable notice before leaving, just as an employer may need to before dismissing

Employment Issues: Robert Yeager

The law is replete with cases where the employee, having had his or her employment terminated by the employer, is awarded by the court damages equating to the employee’s pay for a period of time known as reasonable notice. The law tends to favour protection of the vulnerable against the powerful, and this can especially be seen in employment law. The Supreme Court of Canada entrenched this tone of protectionism of employee’s rights during dismissal in a decision years ago, but the trend was already well-established in trial courts.

The basis for courts awarding reasonable notice to wrongfully dismissed employees is essentially to give the employee a reasonable period of time to make the difficult transition from existing employment, through the trauma of dismissal and the requisite job search, to new employment. The reasonable notice period is supposed to provide the employee with what the courts view as a reasonable period of time in which to make the transition and find new employment. And the dismissing employer is required to provide this time, or equivalent money in place of it, to the employee. That is wrongful dismissal in a nutshell.

But what about where there is no dismissal, where the employment contract ends at the instigation of the employee? What is the law then? The employment contract is a two-party device; employer and employee. There are duties owed both ways. The employer owes duties to the employee, and the employee owes various duties to the employer, some such as confidentiality, non-solicitation and fiduciary duties that may survive the ending of the employment. But does the employee owe the employer a duty of reasonable notice upon resigning?

The modern workplace presents numerous opportunities for the skilled employee, and if a better opportunity presents itself, many employees will make the jump from one employer to another without much of a goodbye. I do not have statistics on this, but I am willing to wager that the employment contract is ended approximately equally by the employer in dismissing and the employee in resigning. Yet what we see are employees suing employers for wrongful dismissal.

So, is turnabout fair play? Does the employer have a case for reasonable notice on the same basis as the employee, in other words, to make the transition from the loss of an employee’s services for a reasonable period of time so as to allow the employer to make the adjustment and attempt to replace that employee?

The answer is yes, with qualifications.

A resigning employee can be held to owe the employer reasonable notice, but the courts have hesitated to apply the standards for determining reasonable notice in favour of a dismissed employee to the situation of a departing employee.

Rather, “reasonable notice” owed by a departing employee will typically be less than the reasonable notice that the same employee would be owed if he or she were wrongfully dismissed. Partially, this is due to the historic pattern in employment law of the employer simply biting the bullet and moving on. However, it is becoming clearer that not all employers wish to bite the bullet.

In assessing whether and to what degree reasonable notice is owed by a departing employee, the courts will typically look at the prejudice to the employer’s conduct of business caused by the resignation.

The courts will look at the degree of responsibility of the employee and overall importance of that employee to the employer, the vulnerability of that employer to the timing and manner of the resignation, the level of cooperation of the employee in aiding the employer to make the transition, the degree of surprise to the employer of the resignation, the size of the pool of potential replacement employees, the degree of specialization required in the position, geographic location issues, whether such resignation breaches other aspects of the employment contract such as confidentiality, non-competition or fiduciary duty, and such factors that go to prejudice.

Once there is a wrongful resignation, the employer is entitled to be placed in the same financial position as if reasonable notice had been given. Typically, this means the employee would be liable for losses flowing directly or as a reasonable consequence of the employee’s failure to give reasonable notice.

Wrongful resignation has not arisen often in the common law of employment.

However, there are certain fact patterns where one can see the strong potential and incentive for an employer deciding to pursue a resigning employee in damages.

Certainly where the employee resigns to take another position at a heightened time of vulnerability for the employer, such as chartered accountants and tax time, or where the employee resigned, went to a competitor and wrongfully competed against the former employer, a very strong fact pattern may arise for a wrongful resignation case.

Contracts are mutual. Each party has a duty to the other. So employer and employee beware.

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