When a retiring employee changes her mind
Question: If an employee expresses an intention to retire, what is needed to make it official? Can the employee rescind a retirement notice within a certain amount of time?
Answer: In general, a notice to retire is valid and can be enforced if:
• The employee has clearly expressed an intention to retire
• The employer accepts.
In Kieran v. Ingram Micro Inc., the Ontario Court of Appeal summarized how courts evaluate an intent to resign (which is analogous to a retirement):
“(Whether) words or action equate to resignation must be determined contextually. The surrounding circumstances are relevant to determine whether a reasonable person, viewing the matter objectively, would have understood (the employee) to have unequivocally resigned.”
The legal test for a finding of resignation involves both an objective element (notice to the employer) and a subjective element (a clear and unequivocal desire to quit while fully cognizant of the consequences). The expression must be more than merely musing. Statements that the employee wants to retire “one day” or emotional outbursts are not enough to show a clear intent to retire. A clear intent is demonstrated by words, action and conduct that put that intention into effect. What is needed is an objective act by the employee showing his intention to carry his resolution to retire into effect.
If an employee provides notice to retire, the notice is not itself a “contract” until it is accepted by the employer. In a British Columbia Court of Appeal case, Tolman v. Gearmatic Co., the court suggested that an employee may change his mind about a future departure from employment until the point the employer has relied on the employee’s intent to leave, to the employer’s detriment. The case ultimately turned on the finding that the employee had not resigned and had merely expressed a vague intention to resign in the future.
If an employee retracts prior to it being accepted by the employer, the employer must show detrimental reliance in order to enforce it. The notice is a representation that, if acted upon, may be to the employer’s detriment. Mere notice will not hold an employee liable to retire, but it can for damages caused by the false representation.
Recently, the Nova Scotia Court of Appeal in Kerr v. 2463103 Nova Scotia Ltd., found that Tolman had no application where a valid offer of resignation was made and accepted. In other words, employees may retract an offer to resign prior to the employer accepting the offer, but once the offer is accepted, employers do not have to accept the retraction.
When an employer receives a notice to retire, it should have a follow-up meeting with the employee to ensure the employee’s intention. Once the meeting is concluded and the employer formally accepts the notice, the employment relationship will come to an end at the specified retirement date.
For more information see:
• Kieran v. Ingram Micro Inc. 2004 CarswellOnt 3117 (Ont. C.A.).
• Tolman v. Gearmatic Co., 1986 CarswellBC 737 (B.C. C.A.).
• Kerr v. 2463103 Nova Scotia Ltd., 2015 CarswellNS 71 (N.S. C.A.).
