Question: Is there common law reasonable notice for resignation?
Answer: At common law is an implied term of the employment relationship (in the absence of an enforceable contractual termination clause) that an employee who is dismissed without cause is entitled to receive reasonable notice of termination. Similarly, an employee also has an implied common law obligation to provide the employer with reasonable notice of resignation.
The amount of resignation notice that will be considered reasonable depends on the circumstances of the case and is usually less than the notice the employer would need to give. The factors that are typically given the most weight in determining the resignation notice period are the employee’s responsibilities, length of service, salary and the time it would reasonably take the employer to replace the employee or adjust to its loss.
Where an employee quits without giving reasonable notice (or without giving the amount of notice that is required by an express clause in the parties’ employment contract), the employee will be considered to have wrongfully resigned. In this situation, the employer will not be entitled to obtain an order requiring the employee to return to work, but it may be able to pursue an action for damages for wrongful resignation.
Damages for wrongful resignation are assessed using the normal breach of contract standard; i.e., the employer is entitled to be put in the financial position it would have been in if the employee had given the required amount of resignation notice. It is important to understand, however, that an employer will only be able to collect damages for wrongful resignation if it is able to show that it has suffered measurable losses arising from the fact that the employee did not give enough resignation notice. Expenses or losses that arose from the resignation itself — and which the employer would have incurred even if reasonable notice had been given — will not be compensable. Because of this, wrongful resignation actions are relatively rare.
The duty to mitigate applies in wrongful resignation claims, meaning that the employer has an obligation to take reasonable steps to reduce its losses by replacing the departed employee. If the employer is able to replace the employee, it should be able to recover the amount it was required to pay the replacement over the period of reasonable notice, less the salary and other costs it saved by not having to pay the employee during the same period.
If the employee who resigned wrongfully was in a senior executive or specialized position, the resignation notice period is likely to be longer, and the employer may be able to establish damages based on lost profits arising from the employee’s failure to give proper notice. Also, if the employee resigned to join a competitor, the employer may be able to recover damages based on the losses it has suffered, or the profits the employee and/or the competitor has gained, as a result of the employee’s unfair competitive activities during the resignation notice period.
Colin Gibson is a partner with Harris and Company in Vancouver. He can be reached at (604) 891-2212 or [email protected]