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Author: Stacey R. Ball

Workplace Romance: Cause for Dismissal?

by Stacey R. Ball| | Cause For Dismissal

Commonly, our workplaces become the places where we spend most of our time. The majority of our day is spent working alongside our various co-workers. Inevitably, this time together creates bonds between you and your co-workers. Sometimes, those bonds extend further than friendship. Sometimes, those bonds become romances and relationships.

At first glance this sounds like a great, happy thing – but, do these romances carry risks? Could these romances jeopardize your employment? This concern is especially pressing when the romance is between an employee and a supervisor or manager. In this blog post, we will discuss what the Federal Court of Appeal said about such relationships in their 2013 decision Payne v Bank of Montreal.

Payne v Bank of Montreal: The Basic Facts

Mr. Payne was Branch Manager for the Bank of Montreal. He had a romantic relationship with his subordinate, the assistant manager Ms. Carter. This power dynamic between subordinate and superior is very notable. They also made little effort to keep their relationship separate from their work. It was known that they were intimate both outside work and during work hours. According to the adjudicator, Mr. Payne’s conduct was “reckless in the extreme.”

When the Bank found out about this relationship, Mr. Payne was terminated for cause. Undoubtedly Mr. Payne’s conduct was reckless, dangerous and foolish, but was it so serious that it amounted to cause?

Power, Threats and Promises

One very important factor going towards cause in cases such as this is the power imbalance between the superior and their subordinate. What matters is whether or not the superior has taken advantage of that power imbalance to coerce the subordinate into the romantic relationship either through duress or exploitation of some sort. It could be threats of discipline or reprisal, or promises of opportunity and preferential treatment. In brief, the issue is whether or not the superior’s conduct is unwelcome. In this case, Mr. Payne knew that Ms. Carter was vulnerable. He was responsible for writing her performance reviews, and her most recent was anything but positive. Ms. Carter claimed to have felt pressured to continue the relationship. Knowing this, and being aware of the power imbalance between the two, was it right for the Bank to terminate Mr. Payne for cause?

According to the adjudicator, and as upheld by the Federal Court of Appeal, it was not. Despite the power imbalance that existed between the two, the evidence revealed that everything was fully consensual. There was no evidence that Mr. Payne made any threats or promises related to work, and in the absence of such evidence, romantic relationships between superiors and their subordinates do not necessarily constitute cause for dismissal. Indeed, an inequality of bargaining power does not necessarily mean that such relationships are involuntary. Consent is vitiated by duress, unconscionability or exploitation, not by power imbalances necessarily.

As there was nothing to show that the romantic relationship between Mr. Payne and Ms. Carter was anything but consensual, there was nothing to show that Mr. Payne’s conduct was unwelcome. As such, the Bank was mistaken to terminate Mr. Payne for cause on these grounds. Termination was held to be excessive.

Can Romance Exist at Work?

As Payne v Bank of Montreal demonstrated, consensual romantic relationships between co-workers, on its own, will not be sufficient to justify termination, even when there is an inequality of bargaining power between the two parties. However, as noted by the adjudicator, it was certainly “dangerous, foolish and reckless”, especially because the couple was intimate during working hours.

What can you take away from this decision? It is okay to fall in love with your co-workers, but it is likely best to keep the love separate from the work.

What’s the Difference: Aggravated and Punitive Damages

by Stacey R. Ball| | General

Apart from receiving damages for wrongful dismissal, a dismissed employee also stands to benefit where aggravated and punitive damages are awarded against the employer. This is relatively rare, but it does happen.

In a recent decision by the British Columbia Court of Appeal, Acumen Law Corp. v. Ojanen, we saw an employer attempt the argument that punitive damages should not be awarded because they would be based on the same conduct that had already been compensated for through an award of aggravated damages. The Court of Appeal held otherwise. Aggravated and punitive damages are discrete sets of damages in wrongful dismissal proceedings and can indeed be awarded based on the same exact conduct. The fact that aggravated damages had already been awarded did not preclude the court from awarding punitive damages based on the same conduct. This is because aggravated and punitive damages are not the same – they serve different purposes.

So, what are those purposes? What is the difference between aggravated and punitive damages?

Aggravated Damages

Aggravated damages (sometimes referred to as “moral damages”) are compensatory. This means that aggravated damages are awarded to compensate a dismissed employee for a loss they have suffered. This must be a loss that extends beyond the feelings of disappointment, shock or anger that would be typical following an unexpected and without cause dismissal. For an award of aggravated damages, there must be actual loss or damage flowing from the unfair or bad faith conduct of the employer in the manner of dismissal. If an employee is dismissed in a manner that is abusive or unfair, they might have a claim for aggravated damages as compensation in addition to damages for wrongful dismissal.

In Acumen Law Corp v. Ojanen, aggravated damages were awarded to the employee due to the manner of dismissal. The employer’s actions were unfair, unduly insensitive and in bad faith. The employer had, among other things:

  • Dismissed the employee without allowing her to explain her actions and without telling her that her actions were prohibited;
  • Publicly dismissed her in front of her classmates and lied about the reasons for doing so; and
  • Accused the employee of deceit and dishonesty based on nothing but unfounded suspicions.

Based on these actions, the dismissed employee was awarded $50,000 in aggravated damages.

Punitive Damages

In Acumen Law Corp v. Ojanen, the employer attempted to argue that punitive damages should not be awarded because they would be based on the same conduct that led to the award of aggravated damages. However, punitive damages, in contrast to aggravated damages, are not compensatory. They serve an entirely different purpose. The focus of punitive damages is retribution, deterrence and denunciation. Punitive damages are intended to punish the employer, the deter the employer and others like them from engaging in similar behavior in the future, and to demonstrate the community’s collective condemnation of what the employer has done. The Supreme Court of Canada has said that punitive damages are only to be imposed where “there has been high-handed, malicious, arbitrary or highly reprehensible misconduct that departs to a marked degree from ordinary standards of decent behaviour” (Whiten v. Pilot Insurance Co., [2002] 1 S.C.R. 595). It is not about compensating the employee – rather, it is about punishing the employer.

Where, as is the case here, there have already been aggravated damages awarded to the employee, the question becomes whether those damages are sufficient to meet the objectives of punitive damages. Where they are insufficient, punitive damages can be awarded even on the same conduct.

In Acumen Law Corp v. Ojanen, the British Columbia Court of Appeal felt that the $50,000 award of aggravated damages was insufficient to punish the employer, to deter the employer, and to reflect society’s condemnation of the employer’s behavior. As a result, the Court of Appeal awarded a further $25,000 in punitive damages.

Conclusion

Employees who have been treated unfairly in the manner of their dismissal may therefore be able to recover greater damages than what wrongful dismissal alone could provide. Employers must therefore be mindful of how they treat their employees, even at the point of termination.

Workplace Investigations Prior to Dismissal

by Stacey R. Ball| | Cause For Dismissal| | Constructive Dismissal| | Wrongful Dismissal

At common law, employers do not have a duty to investigate allegations of misconduct prior to dismissing an employee. However, having no duty to conduct investigations at common law does not necessarily mean that courts do not want to see those investigations taking place. In fact, if an employer is required to establish just cause for dismissing an employee, they may very well wish that they had conducted such an investigation anyway. Not conducting an investigation and not affording the employee a reasonable opportunity to respond to allegations of misconduct could make it much more difficult for an employer to discharge the burden of establishing cause for dismissal.

When to Conduct an Investigation: Mazanek v. Bill & Son Towing

The recent Ontario Superior Court decision Mazanek v. Bill & Son Towing provides an instructive example of when an employer should conduct an investigation prior to dismissal despite not having a duty under common law to do so.

At issue in this case was the summary dismissal of an employee who worked as a tow truck operator. The employer argued that there was cause for dismissal on the grounds that the employee was stealing gas. The employee was given no warnings and was not given an explanation at the time of his dismissal.

There were four drivers working for the company and each driver shared one company gas card to refill their trucks. In reviewing the fuel consumption for the company’s main truck, it was discovered that the fuel consumption was unusually high. The employee was terminated as a result of this high fuel consumption. A co-worker and fellow driver was also terminated, for the same reason.

The company possessed the burden of proving that there was just cause for the employee’s termination on a balance of probabilities. They failed to discharge this burden. One important reason why they failed to discharge this burden was because the investigation they performed was inadequate. The company’s investigation and internal review revealed that either the employee or the co-worker who was fired alongside him were the ones operating the truck at the time of the irregularly high fuel consumption. The company could not determine which of the two was responsible, so the company terminated both. The company did not bring the allegations of theft to the employee’s attention. They did not give the employee the opportunity to respond. They could have but did not take steps to obtain better evidence of the alleged theft before proceeding with the termination.

The Court found that the employer should have given the employee the opportunity to respond to the allegations, particularly where the allegations are serious. Allegations of theft, fraud, and sexual harassment were noted by the Court as being serious allegations deserving of such an opportunity to respond.

The investigation failed to establish just cause not only because it did not afford the employee with the chance to respond, but because it only revealed that the employee or his co-worker might have been the ones involved. This uncertainty was not enough to establish cause for termination. As such, the Court found there was no cause. Had the employer conducted a thorough investigation, they may have been able to show that the employee was the one stealing the gas and they may have been successful in demonstrating cause for dismissal.

Takeaway for Employers

Although employers generally do not have a duty at common law to investigate allegations of misconduct prior to the dismissal of an employee, the above case demonstrates that it may be pragmatic to conduct such an investigation in any event. If an employer were to find themselves having to defend their decision to terminate an employee in the context of a wrongful dismissal suit, they may benefit greatly from the support of a thorough investigation proving the misconduct alleged.

An Employer’s Failure to Act in “Good Faith” May Invalidate Lawful Termination Clauses

by Stacey R. Ball| | Employment Law

An employee who is terminated without cause from their job is generally entitled to receive either reasonable working notice or pay in lieu of notice. Often, employment agreements will contain provisions specifying exactly how much notice or pay is required. These are important provisions for employers as, without these provisions, they may be obligated to pay very high compensation to terminated employees as damages for wrongful dismissal.

However, having such a provision, even if absolutely valid and enforceable, might not be enough. In the recent Ontario Superior Court decision Humphrey v. Menē, Justice Gina Papageorgiou found that an employer could not rely on such a provision because their bad faith conduct amounted to a repudiation of the entire employment contract, including the termination provisions therein.

Duty of Good Faith

Employers have an obligation of good faith and fair dealing in the manner of dismissal of their employees. They cannot be unduly insensitive and unreasonable in the manner of dismissal. They must also be candid and forthright with their employees. The duty of good faith also imposes an obligation to protect employees from bullying, intimidation and harassment by managers.

In Humphrey v. Menē, it was acknowledged that all employment agreements possess the implied term that employers will conduct themselves in good faith. Where an employer departs from this implied term of good faith in a significant way, employees should not be bound by the “extremely disadvantageous provisions” they agreed to.

Humphrey v. Menē: The Bad Faith Conduct

Justice Papageorgiou awarded the employee with $75,000 in aggravated and punitive damages as a result of the employer’s bad faith conduct. That bad faith conduct included:

  • Hostile, belittling and controlling behaviour by the CEO including swearing at the employee;
  • Subjecting the employee to a toxic workplace;
  • Setting the employee up to fail;
  • Embarrassing and humiliating the employee before co-workers and clients;
  • Significantly exaggerating performance issues; and
  • Alleging cause for termination when the employer knew or should have known that it did not have cause for termination. Here, the employer was aware for more than five months that their “for cause termination” argument was untenable.

Furthermore, the bad faith conduct amounted to a repudiation of the employment agreement and therefore entitled the employee to common law wrongful dismissal damages. The employee was awarded with 11 months’ notice, which amounted to approximately $82,500.

Key Takeaway

This decision represents an important reminder to all employers that they must treat their employees fairly and always comply with their implied duty of good faith Had the employer complied with their duty of good faith, the employee would only have been owed their minimum entitlements under the Employment Standards Act and the employer would not have had to pay $82,500 in wrongful dismissal damages and $75,000 in aggravated and punitive damages.

Employers, therefore, should strive to always act fairly and honestly when terminating an employee. Do not pretend to terminate for cause where you know cause does not exist. This may backfire in a very serious and very costly way.

Is it Possible to Work Without an Employment Contract in Ontario?

by Stacey R. Ball| | Employment Contracts

You do not need to sign an employment contract in order to work in Ontario. However, it is also not possible to be working in Ontario without a contract. This is because it is impossible to be in an employment relationship without also being in a contractual relationship. In Ontario, a contractual relationship exists the moment an employment relationship exists. All employment relationships are contractual, regardless of whether or not you have signed a contract. The following will explain how this works.

What Happens When You Do Not Sign a Contract?

If you have not signed a contract specifically setting out the terms and conditions of your employment, then those terms and conditions will by default be defined by law. In Ontario, this means that the terms and conditions of your employment will be governed by the Employment Standards Act, the Human Rights Code, and the common law.

For example, even where there is no signed employment contract, you cannot be paid less than the applicable minimum wage. You cannot be required to work longer than 48 hours in a week. You cannot be fired on a without cause basis without your employer providing you with proper notice or adequate termination pay. This all remains true regardless of whether or not you have signed an employment contract.

Benefits of Signing an Employment Contract

It is not necessary to have signed an employment contract to work in Ontario. However, there are many reasons why it might be a good idea to have one anyway. The terms and conditions provided by Ontario legislation such as the Employment Standards Act are minimum terms and conditions, not maximums. For instance, the Employment Standards Act sets out the minimum wage, not the maximum wage. Employment agreements enable employees to negotiate for terms and conditions that are greater than their minimum entitlements. Significantly, written employment contracts reduce uncertainty in employment relationships. The duties and obligations of the employee and employer are often plainly set out.

For employers, employment agreements are particularly useful. The common law often provides employees with rights that employers would rather they not have. Employment agreements offer the solution. A properly drafted employment agreement can remove many of those common law entitlements. Perhaps most significantly are the entitlements employees have under common law to reasonable notice or termination pay. These can be quite high and therefore quite expensive for employers.  A properly drafted termination clause could limit termination pay from what might be 24 months’ pay under common law to just 8 weeks’ pay, thereby saving the employer a lot of money. Employers might also find it useful to include non-competition, non-solicitation, and non-disclosure provisions.

Employment Contracts are Not Always Enforceable

An employee who has entered into a contract that limits their entitlements might nevertheless walk away with their common law entitlements if they can show that, for whatever reason, the contract they signed is not enforceable. This might be the case where, for instance, the contract was entered into without proper consideration (i.e., a contract might be unenforceable if it was given to the employee after they had already started working). A contract that does not comply with the minimum standards set out by Ontario legislation will also be unenforceable.

Where a contract or contractual provision is shown to be unenforceable, it will be replaced by the relevant common law entitlement.

Careful Scrutiny

Whether you are an employee or an employer, the terms of any employment contract must be carefully scrutinized. That contract, including any errors contained within, will inevitably alter the very terms and conditions of the employment relationship.

Employment Abandonment

by Stacey R. Ball| | Employment Law

Abandonment occurs where the words or actions of an employee, viewed objectively, would lead a reasonable person to conclude that the employee had abandoned the contract of employment. Job abandonment reveals the intention of the employee to no longer be bound by the employment contract and consequently results in that contract being repudiated. Once the employee abandons the employment relationship, the employer likewise is no longer bound by that relationship. Abandonment is functionally the same as a resignation, with the difference being that abandonment is implicit and a resignation explicit. For the employee, this means they lose their entitlement to termination notice and / or termination pay.

Case Study: Betts v. IBM Canada Ltd., 2015 ONSC 5298

This case involved an employee seeking wrongful dismissal damages and an employer seeking summary judgment to the effect that the employee abandoned his employment and consequently was not entitled to damages. The employee was 35 years old at the end of his employment and had been with the employer for fifteen years – a rather substantial portion of his life.

The employee originally worked in Nova Scotia before he was transferred in 2002 to the province of New Brunswick. However, he frequently visited the province of Ontario to teach at the employer’s office in Markham and to visit his fiancée who lived in Mississauga. In 2013, the employee moved from New Brunswick to Ontario to live full-time with his fiancée. The employee made this decision without informing his employer.

Prior to the move, the employee also suffered from very serious depression. The employee testified that his symptoms became unbearable and forced him to stop reporting to work in October 2013, one month prior to his move to Ontario.

His employer did not automatically treat his failure to appear to work as a resignation or abandonment. Instead, the employer provided him with a series of five letters setting out his options and deadlines to return to work. The employer unilaterally provided many extensions to these deadlines despite being under no obligation under law to do so.

After five letters and 8 months of absenteeism, the employer decided to treat the employee’s refusal to return to work as a voluntary resignation. The employer relied on a number of objective factors (recall that the test for abandonment is an objective one) to support their decision, including:

  • a) the employee’s failure to report to work and fulfill his employment obligations for over 8 months; and,
  • b) a voluntary and undisclosed relocation from New Brunswick to Ontario coupled with a lack of intention to return to New Brunswick for work.

Holding

The motion judge agreed with the employer. Although there is no doubt the employee suffered from depression, he was nevertheless aware of his responsibilities and what was expected of him. The employer sent numerous letters advising the employee of his options and even extended the courtesy of extensions to return to work. The motion judge drew a comparison between the employee’s unilateral decision to relocate to Ontario and a hypothetical situation where the employer had changed the terms of the employee’s employment and forced him to relocate to a new province as a condition of continued employment. The latter would be a constructive dismissal. Why, asked the motion judge, would the former not produce the same result?

In the end, the motion judge held that the employee had indeed abandoned his employment. As a consequence, the employee’s claim for wrongful dismissal damages was dismissed.

Interestingly, the motion judge found in obiter that if the employee had not abandoned his employment and had indeed been terminated he would have been entitled to 10 months’ pay in lieu of notice – an amount resembling approximately $50,000 in damages. Not only did the employee lose out on these damages, they were also ordered to pay to the employer $42,500 as legal costs. Abandonment can potentially be a costly mistake for an employee – in this case, it certainly was.

Government of Canada COVID-19 Support Extension

by Stacey R. Ball| | General

Although approximately 67% of Canadians are fully vaccinated as of August 2021, the Government of Canada is aware that COVID-19 continues to have serious consequences for Canadian businesses. To that end, on July 30, 2021, the Government of Canada announced the extension of certain COVID-19 support measures with the goal of continuing to provide for workers and businesses in need. Among these extensions are the Canada Emergency Wage Subsidy, the Canada Recovery Benefit, the Canada Recovery Sickness Benefit and the Canada Recovery Caregiving Benefit. These will be extended until October 23, 2021.

  • “Throughout the pandemic, our government has been committed to doing whatever it takes to support Canadians and Canadian businesses. Our economies are safely and gradually reopening but many small businesses and workers are still getting back to business. Extending these supports—which have been lifelines for many—is needed. This is of particular importance for those workers and businesses that have been hit hardest by the pandemic and are still reopening and rebuilding. Our government will continue to be there for Canadians and make sure that all workers and businesses are well positioned to come roaring back.”
    • – The Honourable Chrystia Freeland, Deputy Prime Minister and Minister of Finance

Canada Emergency Wage Subsidy

The Canada Emergency Wage Subsidy was introduced to help employers pay the wages of their employees. Ideally, the subsidy will help employers re-hire employees and prevent job losses and job abandonment despite potentially massive losses of revenue as a consequence of COVID-19. The Emergency Wage Subsidy is known to have helped more than 5.3 million Canadians keep their jobs. Originally this subsidy was scheduled to expire In June 2021, but was extended until September 25, 2021. Now, the Government proposes to extend it further to October 23, 2021. In addition, the maximum rate for the wage and rent subsidies was expected to be 20% between August 29 and September 25, 2021, however this rate has been increased to 40%. The maximum weekly benefit per employee provided by the subsidy would therefore be $452. The maximum rate for the extension into October will be set at 20%.

As of August 2021, over 4 million applications for the Canada Emergency Wage Subsidy have been approved, amounting to over $90 Billion of subsidies.

Canada Recovery Benefit

The Canada Recovery Benefit is administered by the Canada Revenue Agency and is intended to provide income support to employed and self-employed individuals who are affected by COVID-19. Originally, it was expected that individuals would be eligible for a total of 50 weeks of support between September 27, 2020 and September 25, 2021. However, the Government of Canada is now proposing to extend that by another 4 weeks to October 23, 2021. The maximum number of weeks would therefore be 54 weeks. The rate would be $300 per week.

As of August 2021, over 25 million applications for the Canada Recovery Benefit have been approved. This has resulted in over $24 Billion in support. It is likely that the additional four weeks of support will result in a further 1.2 million applications being approved.

Bonus After Termination

by Stacey R. Ball| | General

Many employees ordinarily receive a bonus in addition to their base salary. If such an employee is terminated from their employment prior to receiving the bonus they expect to receive, they may be wondering whether or not they are still entitled to that bonus. In many cases, they will be.

When will you be entitled to your bonus?

When an employee is terminated on a without cause basis, they will be entitled either to a working notice period or to pay in lieu of notice. The amount of compensation an employee earns through pay in lieu of notice should reflect what the employee would have earned during the notice period had they actually worked it. Whether or not bonuses should form part of this compensation was addressed by the Ontario Court of Appeal in Paquette v TeraGo Networks Inc (2016 ONCA 618), which was later approved by the Supreme Court of Canada in Matthews v Ocean Nutrition Canada Ltd (2020 SCC 26).

In determining whether a dismissed employee continues to be entitled to their bonus, the Supreme Court of Canada says two questions must be asked:

  1. Would the employee have been entitled to the bonus or benefit as part of their compensation during the reasonable notice period?
  2. If so, do the terms of the employment contract or bonus plan unambiguously take away or limit that common law right?

If the answer to the first question is yes, and the answer to the second is no, then the employee should continue to be entitled to their bonus.

The effect of an “active employment” clause

In Paquette, the Ontario Court of Appeal considered whether a dismissed employee could be denied their bonus because the contractual terms of the bonus required that they be “actively employed.” In the lower court, the motion judge denied the employee damages for lost bonus because the employee was not “actively” employeed during the notice period. On appeal, the Court held otherwise. The employee’s claim for damages was not for the bonus itself, but rather was for the income the employee would have received had the employer not breached the employment contract by failing to give reasonable notice. The result is that an “active employment” requirement does not prevent a dismissed employee from recovering that bonus if they would have received the bonus during the notice period.

Bonus Paid Outside Notice Period?

Based on the above, an employee should receive their bonus if they would have earned it in any event had they worked through their notice period. However, what happens if an employee is on track to receive their bonus but their notice period ends slightly before that bonus becomes available? Imagine, for instance, that the notice period ends the day before the bonus becomes available. Should that employee nevertheless receive their bonus? According to the Ontario Court of Appeal in Andros v. Colliers Macaulay Nicolls Inc. (2019 ONCA 679), not allowing such an employee to seek at least a pro rata (i.e., proportional) share of their bonus would result in untenable unfairness. Instead of asking whether the bonus would have been received, the better question, therefore, is whether the bonus was earned (or even partially earned). The employee should receive the share of the bonus they earned had the employer not breached the employment contract. As a result, despite the notice period not actually reaching the day the bonus would ordinarily be paid, the employee should still be compensated.

When Can An Employee Rescind Their Resignation?

by Stacey R. Ball| | Employment Contracts| | Employment Law| | General

Ideally, you would never resign from a job unless you were absolutely sure that you wanted to. But mistakes happen. Is it possible to “take back” (or rescind) your resignation after it has already been given?

Submitting a Valid Resignation

In order for this issue to even arise, you must have submitted a resignation. However, a resignation must meet certain requirements to be enforceable in the first place. If your resignation was not valid to begin with, it would not have been a true resignation and there would be nothing to rescind.

To be enforceable, a resignation must be:
1) Voluntary;
2) Clear and unequivocal; and
3) Accepted by the employer on the same terms proposed by the employee (i.e., it must be accepted as offered).

To be voluntary, the employee must have the mental legal capacity to resign. Furthermore, the resignation will not be voluntary if it is given as a result of a constructive dismissal or if the employee was told to “quit, or be fired”.

To be “clear and unequivocal”, there must be employee conduct that makes it very clear, without any doubt, that the employee intends to resign. This will not be the case where the resignation is conditional on something happening (i.e., “I will resign if you ask me to work on Saturday”). The emotional state of the employee also is a factor to consider. If the employee emotionally or angrily declares “I quit!”, there is the chance they did not truly mean what they said. In that case, the employer would be obligated by their duty to act in good faith in terminating employment to take further steps to determine what the employee truly meant. Context is very important.

Rescinding a Valid Resignation

Let’s assume now that the submitted resignation was valid. Under what circumstances can that valid resignation be taken back (or rescinded)?

Rescinding a valid resignation was easier in the past. It was traditionally held that employees could rescind resignations even after the employer had accepted them provided that the employer had not yet relied on the resignation to the employer’s detriment. However, this approach faced criticism for being contrary to established contract law. It has subsequently been rejected.

Today, an employee is unable to rescind a validly submitted resignation if:
a) The resignation has already been accepted by the employer, or

b) The employer has not yet accepted the resignation but has nevertheless
relied on the resignation to its detriment.

However, if the employer consents to the employee rescinding the resignation, then the resignation may be taken back notwithstanding either of the above.

Recent Case Law: English v Manulife

In a relatively recent decision by the Ontario Court of Appeal, an employee was permitted to rescind a resignation on the grounds that it was not clear and unequivocal, and therefore not enforceable. Interestingly, it was the employer’s conduct in this case that made the resignation unenforceable. When the employee submitted her resignation, her supervisor told her that she could always change her mind before the resignation date. The resignation was otherwise valid.

By promising the employee that she could change her mind at a future date, the supervisor effectively made the resignation equivocal. The resignation was now conditional on the employee not changing her mind before the stipulated resignation date. As we know, resignations that are conditional on something happening are not enforceable. Because of the supervisor’s mistake, the employee did not resign and instead the employer was found to have terminated her without cause. The employer was then ordered to pay 12 months’ salary in lieu of notice.

When it comes to resignations, it is important to be sure of your decision. In fact, it is necessary. As demonstrated by English v Manulife, an employer should also be very careful to accept and rely only on resignations that are clear and unequivocal.

Inducement: Increased Notice Periods

by Stacey R. Ball| | General

If your employment has been terminated without cause, you are entitled to either a notice period or to pay in lieu of such notice. The amount of notice varies depending on a number of different factors including your age, character of employment, and length of service, among others. In a decision earlier this year, the British Columbia Supreme Court considered another factor: inducement by your employer. That case was Younesi v. Kaz Minerals Projects B.V.

Factual Overview

Mr. Younesi was employed with Kaz Minerals Projects B.V. as an Engineering Manager for just over two months. Before joining Kaz Minerals, Mr. Younesi was working as a project manager for National Grid USA, a position he held for two years prior to joining Kaz Minerals. At National Grid, he earned up to $155,000 USD and enjoyed health care benefits, 401K contributions as well as paid vacations. It was no doubt a comfortable position to have.

Mr. Younesi gave all this up, however, when he was approached and actively recruited by Kaz Minerals. The Court acknowledged Mr. Younesi was “headhunted” by Kaz Minerals. In their offer letter, Kaz Minerals projected that Mr. Younesi would be employed or just under two years. The letter also provided Mr. Younesi with a comparison of the compensation offered by Kaz Minerals against his current employer, National Grid. Notably, Mr. Younesi was promised a substantial increase in base salary and vacation entitlements for the nearly two years he was expected to work.

It is no surprise that Mr. Younesi accepted the offer. Clearly, this comparison of compensation was intended to induce Mr. Younesi to leave his current position with National Grid and to join Kaz Minerals. It was convincing, and it worked. Mr. Younesi left a comfortable position to work for Kaz Minerals.

Understandably, he was very upset when he was fired only two months later.

The Role of Inducement in Assessing Notice Period

Where an employee has been induced to leave secure employment, this can be an important consideration in determining the amount of reasonable notice. Presumably, an employee would not leave a secure position if there had not been at least an implied agreement of job security with the new employer. This is not a new concept. In the 1984 decision Hooker v. Audio Magnetics Corp. of Canada Ltd., an employee who was induced away from a secure position was awarded 14 months’ notice despite only having worked one year with the new employer.

In Mr. Younesi’s case, the Court had no trouble concluding that he had been induced to leave his prior job. The compensation comparison was sufficient to draw this conclusion.

In referring to the offer, the Court said, “It was designed to be an irresistible offer having regard to Mr. Younesi’s personal circumstances.”
Inducement is a matter of degree. The inducement in one case may not be as attractive as the inducement in another. In this case, the inducement was fairly strong and Mr. Younesi was quick to bite.

The Court, in considering the inducement, concluded that it was reasonable to increase the notice period owed to Mr. Younesi by an additional two months.