Terminating employee who gives lengthy notice of resignation

Question: Senior employees are often expected to provide more than the minimum two-week notice period if they resign. If an employee provides, for example, six months’ notice, can the employer then terminate with the minimum employment standards termination notice or pay?

Answer: The obligations of a resigning employee do not get nearly as much attention as those of the terminating employer. According to the 1993 Ontario decision Sure-Grip Fasteners Ltd. v. Allgrade Bolt & Chain Inc., “an employee is obligated by law to give reasonable notice of termination to his or her employer. The main purpose of the notice of resignation is to allow the employer a reasonable time to find a replacement.”

Many people think employees are simply required to provide two weeks of notice. While that is not an unreasonable amount of notice in most cases, the legal reality is that every case is supposed to be assessed upon its own particular set of circumstances. Senior employees, and those who will be particularly difficult to replace, are likely to be required to provide significantly more notice of resignation.

In many cases, an employee will provide notice of resignation and the employer will decide, for one reason or another, it does not want the employee to continue coming to work during the notice period. Typically, the employer will simply advise the employee she does not need to continue to come into work. However, the employer is obligated to continue paying the employee through the notice period.

Occasionally, circumstances arise where an employee, either intentionally or otherwise, purports to provide an excessive amount of notice of resignation. For example, there would generally be no reason for a cashier in a convenience store to provide six months of notice. However, what is an employer to do if an employee does so?

In Oxman v. Dustbane Enterprises Ltd., the employee, Oxman, provided six months’ notice of his resignation. The employer, Dustbane, decided to waive the notice period and terminate the relationship 29 days later. The Ontario High Court found Dustbane was not obliged to keep the employee or pay him for the notice period given by the employee.

“The six months' notice was a term provided by Oxman (and indeed a requirement of the law) for the benefit of the company,” said the court. “The company could waive it and accept his resignation immediately for the reason that the decision to resign was that of Mr. Oxman and unless he negotiated it he was not entitled to force upon the company a period of continued employment while he made other plans.”

The Ontario Court of Appeal, however, overturned the trial court’s judgment. The Court of Appeal ruled that if an employer accepts the employee’s offer to resign in six months, it would mean the employee would continue on as an employee for those six months and his employment would only terminate at the end of that period.

Although the trial judge felt the notice provision was for the benefit of Dustbane and Dustbane was entitled to waive that notice and still accept the resignation, Justice Finlayson of the Court of Appeal ruled that “if the offer of resignation is not accepted as offered, which in this case would include a six-month notice period, its acceptance is not binding on the employee and does not terminate the employment.”

Dustbane’s premature termination of Oxman's employment was a termination on Dustbane's terms. Since “Dustbane, as employer, had a like duty to terminate on reasonable notice, or pay damages in lieu thereof, the duty of the trial judge was to determine what would be a reasonable period of notice for Dustbane to give Oxman. Having determined that Oxman's notice to Dustbane of six months was more than reasonable, the trial judge should have awarded him damages for wrongful dismissal, the measure of which is the difference between the one-month period paid by Dustbane and the six months offered by Oxman.”

Many employers proceed as Dustbane did when they are confronted with what they believe to be an excessive amount of notice of resignation: They simply reject the amount of notice provided and substitute a notice period they consider to be reasonable. There are not many cases in which our courts have considered such circumstances. However, the Oxman case, ultimately addressed by the Ontario Court of Appeal, suggests that it is not simply open to the employer to accept the resignation, but substitute a different notice period. According to the reasoning in that case, the employee is not bound by the offer of resignation if the employer does not accept it. In other words, if the employer chooses not to accept the amount of notice offered, it is rejecting the resignation entirely.

As a result, according to this line of reasoning, the employment relationship would not be terminated. If the employer wanted to terminate the relationship, it would then have to dismiss the employee, presumably on a without cause basis, and provide notice of termination or pay in lieu thereof. If it does not, the employee could liable for damages, as occurred in Oxman, where the employer was ultimately ordered to pay five months’ pay in lieu of notice, which was the difference between the six months offered by the employee and the one month actually provided.