Jun 16, 2021  By John Hyde

Employer claims for wrongful resignation

Employer claims for wrongful resignation

Restaurants and retailers are scrambling to recall their employees from layoff, following the Ontario government’s lift of the stay-at-home order last Friday. While the government has given the green light to begin re-opening, many employers are reporting difficulty coaxing their employees back into the workplace. Some employees have taken up new jobs; others simply do not wish to return to the workplace; and many have failed to keep their pre-pandemic employers informed regarding their intentions. The result is that, many businesses are missing out on the pent-up demand for in-person shopping, dining, and entertainment. Businesses are feeling blindsided by their employees’ refusal to return to work, and the lack of forewarning is causing a significant loss of sales.

Are these employees potentially liable for a wrongful resignation claim? The short answer is yes. We look at the case law to give a practical perspective on the law of wrongful resignation.

  1. What is wrongful resignation?

Wrongful resignation is a common law claim that arises when an employee resigns with insufficient notice. Employers could sue an employee for wrongful resignation if that insufficient notice caused a specific, provable loss.

  1. How much notice is enough?

All employees are required to give “reasonable notice” of resignation at common law. The first place to look when asking this question is the employment contract, which often specifies the required notice of resignation. Absent any written agreement, “reasonable notice” of resignation can vary from job to job. For most employees, that falls somewhere in the range of two to four weeks. Industry practice can also be relevant – for instance, employees in the retail, restaurant, and construction industries typically give less notice than professional workers, managers, and executives.

  1. How does this apply to recall from pandemic layoff?

Employees laid off due to COVID-19 are deemed to be on Infectious Disease Emergency Leave (“IDEL”), unless and until anyone takes further steps to sever the employment relationship. This means that employers may direct employees on IDEL to return to work at any time. If an employer attempts to recall an employee to work, only to find out for the first time that the employee has no intentions of returning, this is effectively a resignation.

  1. What are the damages for wrongful resignation?

Potential claims for wrongful resignation are common, but actual claims are rare. There is a good reason for this: Employers must prove their damages. Specifically, the employer must show that it suffered damages because of the unreasonably short notice given by the employee. Employers may not recover damages that would also result from a resignation with proper notice. For instance, if a company loses clients after the resignation of a key salesperson, this may have been an unavoidable result of the resignation – with or without reasonable notice. On the other hand, if a retail store or restaurant is unable to open specifically due to a short-notice resignation of a replaceable employee, the business may have a potential claim for the resulting loss of profits. In summary, the difficulty lies in proving the damages flowing from an employee’s wrongful resignation.

  1. How can employees protect themselves?

If you plan on resigning, simply give your employer enough notice to ensure that nothing falls through the cracks. For retail and restaurant employees, 2 weeks should be sufficient. For higher-ranking employees, professionals, key salespeople, managers, and executives, the analysis can be more difficult. Some employees, called fiduciaries, have special duties to their employers resulting from the high degree of trust that is placed in them and, as a result, may need to give several months’ notice of a planned resignation. If your employment agreement does not specify a notice period, we recommend consulting with an employment lawyer.

  1. How can employers protect themselves?

Suing for wrongful resignation can be an uphill battle and should only be pursued with the assistance of experienced employment counsel. The focus, therefore, should be on prevention. We recommend that all employers write resignation notice periods directly into employment contracts and keep the lines of communication open, especially with employees on leave or layoff.

The lawyers at Hyde HR Law have extensive experience providing guidance and assistance in wrongful resignation matters, including how to prevent them. Please do not hesitate to contact us with any questions.

Newsletter Subscription

Stay ahead of the curve by subscribing to our newsletter today. Written by our expert lawyers, this newsletter is completely free and covers a wide range of HR topics.