'If it's clear and unequivocal… then it's hard to backtrack from that,' says lawyer
A federally regulated employer was entitled to accept a worker’s resignation that he provided verbally and in writing, the Canadian Industrial Relations Board has ruled.
Although the worker later claimed he was coerced, the employee’s intention to quit was clear, according to Melanie Samuels, partner and chair of the Employment and Labour Group at Singleton Reynolds in Vancouver.
“If it's in the heat of the moment — someone storms out of a meeting and then says, ‘I'm out of this place,’ then the employer could take the position that it seems like a resignation,” says Samuels. “But if the next day the employee comes in totally contrite and says they didn't mean to do that, the employer can't say 100 per cent that was a resignation — that's where it's a bit gray.”
“But if it's clear and unequivocal — and in this case it was communicated both orally and in writing — then it's hard to backtrack from that,” she adds.
Worker formed own company
The Toronto Terminals Railway Company (TTR) provides operational support for railway services in the rail corridor running through Toronto’s Union Station.
The worker joined TTR in August 2016 as a project manager. His compensation included a performance incentive plan (PIP) bonus, which was based on financial performance targets from Jan. 1 to Dec. 31. TTR’s policy manual stated that an employee who resigned voluntarily or was terminated for cause was not eligible for a bonus for the year in which they leave.
In January 2019, the worker formed a company to bid on small-scale railway transportation projects.
In December 2020, TTR’s director of operations learned that the worker was a director of the company, from which TTR had procured goods and paid invoices. He was concerned that it could be a conflict of interest contrary to TTR’s procurement policy, so he conducted an investigation.
The director invited the worker to a meeting on Dec. 16 to get more information. At the meeting, the director provided a letter outlining that TTR was aware that he was a director of the company in question and that TTR had been receiving invoices from it. It also advised that his role with TTR gave him direct oversight and approval over selecting vendors for project work, which was a conflict of interest contrary to the procurement policy.
Ontario decisions enforce the idea that a resignation must be clear and unequivocal to stick, say employment lawyers.
Response to investigation was resignation
The letter concluded that the procurement policy required the worker to disclose any potential conflicts of interest to the director, and if the information was true, then the worker would be in breach of the policy and subject to discipline up to and including termination.
After some discussion, the worker said that he was resigning his employment. He then prepared a resignation letter stating that there were no new opportunities in his position, he wanted to travel back home for personal reasons, and he wished the director success “as we part away.” He gave the letter to the director about 15 minutes after the meeting ended, which the director accepted.
The next day, the worker went on a preplanned trip and didn’t contact TTR until he returned on Feb. 1, 2021. He wrote to the director thanking him for the opportunity to work with him and suggesting that he could work on a contract basis in the future. He also mentioned that he had drafted his resignation letter in the heat of the moment.
On Feb. 17, the worker contacted TTR asking for his final pay, including his 2020 PIP bonus. TTR replied that all outstanding pay had been provided and he wasn’t eligible for the bonus.
On Feb. 18, the worker filed a monetary complaint under the Canada Labour Code claiming unpaid wages from the PIP bonus. The worker argued that he had completed the work for the year by the time his employment ended on Dec. 16, so he should be entitled to the bonus.
Quitting before a plant’s closing date was still a resignation disentitling workers to severance pay, according to a BC arbitrator.
Unjust dismissal complaint
On March 15, the worker filed a second complaint, claiming that he had been unjustly dismissed and he had been coerced by the director to resign, making it a constructive dismissal. He said that the director asked him to resign and told him that if the investigation revealed fraud, TTR might involve the police.
An Employment and Social Development Canada inspector determined that the worker was entitled to the PIP bonus as he had worked almost the entire year. TTR was ordered to pay the worker $26,000 for the bonus plus vacation pay and an administrative fee.
TTR requested a review of the payment order, arguing that the worker clearly resigned verbally in the meeting with the director and then with a written resignation letter. As a result, he wasn’t entitled to the bonus under the policy, said TTR.
The Canadian Industrial Relations Board noted there was no dispute that the worker told the director that he was resigning his employment in response to the conflict-of-interest investigation. After the meeting, the worker immediately backed up his statement by writing a termination letter, said the board.
“[The worker] specifically used that language on more than one occasion - in the meeting he was clear, “That's what I'm going to do,’” says Samuels. “He then actually put it in writing, ‘I am resigning.’”
Employees who express dissatisfaction with their job aren’t necessarily quitting.
Intention to quit
The board found that there was a prima facie resignation based on the worker’s verbal and written statements, so the worker had to prove that he didn’t intend to quit. The worker asserted that he was coerced into resigning, but he didn’t challenge the validity of his resignation for three months until he filed his unjust dismissal complaint, said the board.
The board also found that during those three months, the worker contacted TTR twice but didn’t say that he was pressured or he wanted to rescind his resignation, although he mentioned that it came in the heat of the moment.
The worker’s claim that he was pressured to resign came down to credibility and it didn’t hold up to scrutiny, says Samuels.
“In previous communications, [the worker] never mentioned that - it just seemed like after the fact he came up with that idea that it was coerced, because maybe he did some research and found out that if a resignation is coerced, then it's not enforceable necessarily,” she says. “It may be that he rethought his position, but there was inconsistency - it's assessed on the preponderance of probabilities, whether something is likely to have occurred or not.”
It was likely that the worker experienced stress when the director told him about the investigation, but that was not the same as duress, the board said. The worker’s resignation letter outlining reasons unrelated to the investigation indicated an intention to resign, said the board.
An employee doesn’t have to say ‘I quit’ if their actions demonstrate an intention to resign, the BC Supreme Court ruled.
Actions consistent with resignation
The board also found that the worker’s actions afterwards supported the resignation, as the worker didn’t seek to return and sent the director good wishes with an offer for contract work in the future. The worker’s post-resignation conduct was “consistent with his intention to resign,” said the board.
“Everything he did was inconsistent with it being a resignation under duress and the employer had every right to rely on the resignation letter,” says Samuels. “The problem is after all that happened, then it's the core fundamentals of the employment relationship, like trust, have broken down.”
As for the PIP bonus, the board found that TTR’s policy manual was clear that an employee was not eligible to receive the award if they voluntarily resign or are terminated for cause before the end of the plan year. The worker resigned before the end of the plan year, so he was not entitled to any award under the policy, said the board.
“If you have good language and a policy, then you're going to be able to rely on that policy,” says Samuels. “It's like preventative medicine - as long as there's clear and unequivocal language in a policy, the employer can rely on that – there's nothing inappropriate about that, it just has to be clear.”
The board allowed TTR’s appeal and overturned the payment order.
TTR’s success in the appeal came from some simple and key best practices, says Samuels.
“Always give your employee an opportunity to respond and confirm everything in writing,” she says. “And ensure you have clear and unequivocal policies.”
See Stephan and Toronto Terminals Railway, Re, 2022 CIRB 1050.
