The best-laid plans for a retiring employee may change
Question: If an employee indicates a retirement date and the employer plans accordingly, does the employer have any recourse if the employee changes his mind and doesn’t retire as planned?
Answer: When an employee provides notification to her employer of an intention to retire from employment as of a certain date, it is in legal terms the same as a notification of resignation of employment.
In law, the basic test for determining whether an employee has resigned is an objective one and, to quote a leading judgment on the subject, the question is: given all the surrounding circumstances, would a reasonable person have understood by the employee’s statement that she had just resigned?
An employee may revoke an offer of retirement before it is accepted, particularly so if the offer is made in the heat of the moment. The cases also establish that an employee may change her mind and attempt to rescind a retirement notice and the law will permit such a change of mind to occur, provided that the employer has not relied upon the notice of retirement to its detriment (such as hiring a replacement employee).
The issue of whether an employer can compel an employee to retire once notice of retirement has been provided was directly considered in Manitoba Government (Re). In this decision, the employee, a 64-year-old correctional services officer, was advised that in order to receive credit for certain vacation days on retirement he had to specify a date of when he intended to retire. In 1992, the employee advised his employer that he was “considering retirement.” The employer requested an effective date. In reply, the employee clearly stated, “I intend to retire in the month of March 1995.” In January 1995, the employee requested approval to rescind his notice of retirement and to amend his retirement date due to financial difficulties. The employer refused, arguing that the notice to retire set in motion a reorganization of the company that resulted in the employee’s position, for all practical purposes, being eliminated.
In considering whether the employer could compel the employee to retire, the arbitrator concluded that the principles governing resignation applied to a situation of early retirement.
The arbitrator was satisfied the employee intended to terminate his employment relationship and the employer relied on this intention to its detriment. Accordingly, the employer was entitled to compel the employee to retire.
As such, before an employee informs the employer of the date she intends to retire, the employee should inquire as to the employer's policies relating to changing her mind, or extension of the retirement date. Employees may also want to inquire as to what steps will be taken as a result of their retirement, because if the employer acts to its detriment as a result of the employee's intended retirement, the employee can be compelled to retire.
For employers, it would be prudent to confirm an employee's intention to retire to ensure it was not made in the heat of the moment. It may also be beneficial for an employer to inform the employee if it plans to take an action that will prevent the employee from revoking or extending her notice of retirement, such as hiring a replacement employee or reorganization of its operation, and again confirm the employee's intention to retire, prior to taking any such action.
For more information see:
• Manitoba Government (Re), [1995] M.G.A.D. No. 84 (Chapman)
Brian Kenny is a partner with MacPherson Leslie and Tyerman LLP in Regina. He can be reached at (306) 347-8421 or [email protected].
