The quandary of quick quits

When employees don't provide adequate or reasonable notice of resignation, do employers have any recourse for any negative effects?

The quandary of quick quits

BACKGROUND

A central element of employment law dealing with termination of employment dictates that employers must provide reasonable notice of dismissal, based on various factors. But what about the flip side? When employees quit their jobs, it's generally considered appropriate to provide two weeks' notice, but quitting workers don't always do that. And if the employee holds an important position and is difficult to replace, short notice could cause significant pain for the employer.

It is conventional wisdom that an employee should give about two to four weeks’ notice when resigning, rather than just suddenly walking off the job and not showing up the next day. An employee who acts in an inconsiderate manner cannot expect to get a good reference or be re-hired in future by that employer.

This clear, practical reason for giving notice does not have a direct counterpart in legal obligations. Ontario’s Employment Standards Act (ESA), for example, does not impose any obligation on employees to give notice. In contrast, it does impose an obligation on employers to give notice to employees prior to terminating them without cause.

In fact, the ESA provides protection to employees when an employer tries to retaliate because they quit without giving notice. The employer has an easy means of retaliation because wages are typically paid a week or two after the work is done. An employer may be tempted to refuse to pay for the last week or two of work to retaliate for the lack of notice, but this is not allowed.

No withholding of pay

Two recent Ontario Labour Relations Board rulings have held that it is forbidden to withhold pay even when the employee has signed a document agreeing to a deduction for quitting on short notice.

In one case — Rainbow Concrete Industries Limited v. Kavan Cheff-Burns — a person was hired to be a cement truck driver. The employer claimed it provided specialized training and his contract stipulated that there would be a $1,500 deduction from his wages to compensate for the training if he quit after less than six months on the job. He did quit after a short time and the employer withheld his last pay. The board ruled that this was illegal and the training wasn’t specialized but rather was on-the-job training. It ordered the employer to restore his pay, noting that employees are entitled to leave their employment with notice ‘at any time.”

The board found that the money deducted from the employee’s last pay was intended to be “a disincentive or means of penalizing” the employee for leaving within six months of his hiring.

“It is an inappropriate restraint on an employee’s right to leave his or her employment and does not gain legitimacy just because an employer attempts to characterize it as a section 13 deduction on the basis of training,” said the board. “The board will not give effect to an arrangement whereby an employee must either remain employed for a set amount of time or face economic repercussions.”

A case this year — Elemental Data Collection Inc. v. Promesse Bama — involved an employee of a market research firm. The employee had agreed in writing that there would be a financial penalty if he quit without giving two weeks’ notice. The board again ruled that the penalty that the employer attempted to impose was unenforceable.

In Elemental Data Collection, the board found that a “pre-estimate” of damages wasn’t enough to support a pay deduction. Actual damages could possibly be recovered with a deduction under the ESA, but an advance agreement of such a deduction was essentially a “penalty for failing to give notice” of resignation to the employer. The board found that employees quitting without proper notice was a risk of doing business that couldn’t be passed on to employees.

The board also found that a deduction from an employee’s final paycheque is more likely to be significant for the employee than the potential damages to the employer from a quick resignation.

“Employers have control over an employee’s wages but should not derive an undue advantage from [pay deductions],” the board said.

As observed in Elemental Data Collection, an employee could in principle be liable for damages at common law to the employer if their resignation without sufficient notice has an adverse impact on the employer’s business. That is more likely to be the case with management or key research employees.

It becomes an issue particularly when those employees are also accused of violating their fiduciary duties by taking trade secrets or setting up competing businesses (such as in the Ontario Court of Appeal decision of GasTOPS Ltd. v. Forsyth). Unless there are such aggravating factors, it would not be practical for the employer to sue for the small amount of damages attributable to the brief notice period to which it is entitled at common law.

Obligations of independent contractors

An increasing number of people now work as independent contractors rather than employees. Sometimes, they have less freedom than an employee to quit on short notice. Independent contractors have the freedom to turn down new work if they are too busy. However, once having agreed to take on a piece of work, the contractor is liable for breach of contract if they quit without completing the job. A contractor who leaves without completing the job may even be denied part payment for work already done (see the British Columbia case of Noakes v. Midence) and may be liable to the client for the costs of hiring a new contractor to complete the work. A contractor, not being an employee, has no protection under the ESA against any withholding of payment for these reasons.

The obligation of independent contractors to provide their clients with notice is also laid out in the standards of professional bodies. For example, the Law Society of Ontario’s rules provide that “a lawyer shall not withdraw from representation of a client except for good cause and on reasonable notice to the client.”

Similarly, the College of Physicians and Surgeons of Ontario requires its members to give clear written notification to the patient and provide “necessary medical services while the patient seeks a new physician.”

The Ontario College of Dentists tells its members that if they want to stop treating a patient, the patient should be “notified formally, preferably in writing” and also told that the dentist will provide emergency service until the patient can find a new dentist.

The best policy is always to behave with courtesy and consideration, whether a person is in the position of an employee or an independent contractor. That will serve to enhance a reputation and provide access to continuing employment in the future. There is no legal obligation for a departing employee to give any specific length of notice. However, in a situation where a person plays a key role, quitting without completing her commitments (whether formal or implied) could create liability for damages for breach of contract. In the case of employees, the protection of the ESA prohibits employers from retaliating by withholding the final paycheque of someone who quits without notice.

For more information see:

• Rainbow Concrete Industries Limited v. Kavan Cheff-Burns, 2016 CanLII 14142 (Ont. Lab. Rel. Bd.).

• Elemental Data Collection Inc. v. Promesse Bama, 2019 CanLII 68046 (Ont. Lab. Rel. Bd.).

• GasTOPS Ltd. v. Forsyth, 2012 ONCA 134 (Ont. C.A.).

• Noakes v. Midence, 2001 BCSC 1368 (B.C. S.C.).

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