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The risks of wrongful resignation litigation

When an employee quits without giving notice, or with very short notice, the employer may be left wondering if they have any recourse against the employee.

Legislation

There are some jurisdictions in Canada with statutes that set out required resignation notice periods.

For example, section 73 of Nova Scotia’s Labour Standards Code sets out the resignation notice requirements if it is the employee who initiates the termination of employment. That section requires that an employee gives one week of notice after three months of employment or two weeks of notice after two years of employment. However, there are also exceptions that establish when an employee does not have to provide any notice.

Similarly, section 58 of Alberta’s Employment Standards Code requires employees to provide one week of notice after 90 days of employment and two weeks of notice after two years of employment. Again, there is also a list of exceptions to the requirement to provide notice of resignation.

However, many jurisdictions, including Ontario and British Columbia, do not have statutorily required resignation notice periods. Instead, there is something known as “reasonable notice of resignation” and “wrongful resignation” under the common law.

Wrongful Resignation

Under the common law, an employee is required to provide “reasonable notice” of their resignation.

What length of time would be considered “reasonable notice” depends on various factors, such as: the position of the employee, how specialized the role is, and how integral the employee was to the company’s operation. In general, the “reasonable notice” is intended to be a sufficient amount of time to replace the employee.

While many people believe two weeks is an appropriate amount of time for notice of resignation, that is not always the case and the “reasonable notice” of resignation may actually be a longer (or shorter) period of time. Longer periods may apply to employees who are in highly specialized roles, who are in high-level positions, or who are otherwise integral to the business – these are situations where it may take a longer time for an employer to find a qualified or appropriate replacement. For example, in Gagnon & Associations Inc. et al. v Jesso et al., 2016 ONSC 209 (“Gagnon”), the Court determined that, for a non-managerial senior employee who was responsible for a significant portion of the Company’s sales, the reasonable resignation notice period was two months.

“Wrongful resignation” is where an employee resigns without providing their employer with reasonable notice and the employer subsequently incurs a loss that was directly caused by the failure to provide sufficient notice.

Challenges to Pursuing a Wrongful Resignation Claim

Given the above information, an employer may be tempted to pursue wrongful resignation litigation when an employee leaves without notice or with very short notice.

However, employers face a significant hurdle in establishing that there were damages that were directly caused by the employee’s failure to provide sufficient notice. If there has only been an inconvenience, but no actual loss, or if the loss is less than the salary that the employee would have been owed during the reasonable notice period, there may not be recoverable damages.

Further, the damages must arise from the insufficient notice and not just from the employee leaving the company. For example, costs of hiring a replacement are usually not considered to be a “loss” for the purposes of wrongful resignation because the employer would have incurred the costs to replace the employee even if sufficient notice had been provided.

Lessons for Employers

Employers need to be aware that, while they may suffer inconvenience and incur operational problems due to an employee’s failure to provide sufficient notice of resignation, for many employees it is not worth the legal costs to pursue a wrongful resignation claim as often there are minimal or no damages directly caused by the insufficient notice. However, this may change in certain circumstances, such as if the employee was in a particularly specialized role or was a high-level employee.

As a note of caution: employers may potentially receive negative attention if they decide to pursue a wrongful resignation claim. For example, news articles were written earlier this year about a BC employer’s unsuccessful attempt to sue former employees for wrongful resignation.

Overall, while an employer may be frustrated at the minimal or lack of notice that an employee provides upon resignation – a thorough assessment needs to be made before pursuing any sort of wrongful resignation claim to determine whether the situation would make such a claim worthwhile.
John Hyde is the managing partner at Hyde HR Law in Toronto. He advises management on all aspects of employment and labour law, including representation before administrative tribunals, collective agreement negotiation, arbitrations, wrongful dismissal defence and human rights.