The fine line between resignation and termination

When tempers flare on both sides, it’s often tough to determine if the worker quit or was fired

Determining if an employee quit or was fired seems like a relatively easy call to make, but case after case has proven otherwise.

A New Brunswick woman who stormed out of the office following an argument with her boss after he discovered she was setting up a competing business was originally awarded compensation in lieu of notice. But the New Brunswick Labour and Employment Board overturned that decision.

Nicole Stevenson started working for Earth Trek, a travel agency specializing in organizing trips for Christian missionaries and church groups, in February 2003. In December 2003 she went on maternity leave, returning in December 2004. Shortly after that she decided to start her own business using the name Luxus Adventures. It was designed to compete directly with Earth Trek.

Stevenson did not tell David Marshall, the owner and operator of Earth Trek, about her plans. She continued to work for Earth Trek while at the same time creating her new business.

On Jan. 10, 2005, she gave at least two weeks’ notice of her resignation. But sometime between Jan. 14-17 Marshall discovered the existence of Luxus Adventures. On Jan. 17 he asked Stevenson to come into his office.

Marshall had found a website for Luxus Adventures and asked Stevenson to explain. In this discussion, which lasted a very short time, Marshall — who was upset — told Stevenson she could not use the database of Earth Trek for her own business as she had signed an employee contract that included a clause entitled “confidentiality.” He gave her a letter to sign which acknowledged she had to return all client lists and information of a confidential nature when she stopped working for Earth Trek. Marshall also told Stevenson he might have to take legal action.

Stevenson reacted angrily, told Marshall she would not sign and said she could do anything she wanted. She left his office and started to pack up her personal belongings.

Marshall followed Stevenson to her desk and refused her access to the computer and asked her to leave her address book. She refused to leave the address book. Before she left, Marshall asked her for the keys to the office and her cell phone, both of which she provided.

Stevenson was originally awarded $600 for payment in lieu of notice. But the board overturned that order, stating that Stevenson had voluntarily resigned.

When Stevenson arrived at work on Jan. 17, she had no intention of resigning, the board said. Nor did Marshall have an intention to fire her. So what happened?

The board said Marshall, although clearly upset and disappointed with the fact Stevenson had created a competing business, had not taken any action to terminate her. The letter Marshall drafted for her to sign asked her to return all client lists and information of a confidential nature when she stopped working for Earth Trek.

“At no point did Mr. Marshall ever ask Ms. Stevenson to leave or indicate that he was terminating her,” the board said.

It was Stevenson who, when presented with the letter, reacted by refusing to acknowledge she had any responsibility to Earth Trek and started immediately to pack up her personal belongings. A reasonable person would have concluded she had resigned, and thus waived her entitlement to the last of her two-week notice period, the board said.

For more information see:

Stevenson v. Earth Trek Unlimited Inc., 2005 Carswell NB 591 (N.B. Labour & Employment Bd.)

The law on termination versus dismissal

The board said the leading case in New Brunswick on this matter is Price v. We Care Home Health Care Services Ltd. It said the following quote from that case best summarizes the state of the law in the area of distinguishing between quitting and termination:

“Having reviewed the case law presented, this board accepts the overall conclusion that there is a difference between ‘quitting’ and ‘being dismissed,’ but this distinction is (often) very difficult to define. Generally speaking, the law is that an employee who ‘quits’ must genuinely intend to sever the employment relationship and demonstrates this intent in a direct manner so that a reasonable person in the position of the employer would believe that the actions of the employee who is alleged to have quit are a manifestation of this intent.

“The burden of proving that one has been dismissed is placed upon the employee who makes this allegation. The test to determine if an employee has resigned is an ‘objective standard.’ The employee’s spoken and/or written ‘words of resignation’ and the surrounding circumstances which might include emotional stress are matters to be considered by this board and it is acknowledged that there is no ‘constructive’ aspect to resignation.”

The test for voluntary resignation was stated in the case of Assouline v. Ogivar, a 1991 British Columbia Supreme Court decision where the court said:

“Given all the surrounding circumstances, would a reasonable man have understood by the plaintiff’s statement that he had just resigned?”

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