Wrongful Resignation

Employees can be sued for wrongful resignation.



When Gary Bradley found a new position, he wasted no time in submitting his resignation — a resignation that left his employer, Carleton Electric, without its manager and with unfulfilled contracts. To make matters even worse, Bradley provided little notice. He was prepared to stay a short time, but was not prepared to provide Carleton with the time it would take to replace him.

The short notice was more than inconvenient to Carleton. The direct and indirect costs of Bradley’s leaving amounted to almost $200,000.

When any employment relationship ends, each party has obligations to the other. It is well-understood that employers must provide reasonable notice to the employees they dismiss. It is less known that employees must do the same. They cannot just walk away from a job with impunity, but have a legal duty to provide their employer with reasonable notice of their intention to leave.

If an employee resigns without providing that notice, that employee can be sued for wrongful resignation, just as an employee can sue for wrongful dismissal when an employer terminates the relationship without providing the employee with proper notice.

Although both employers and employees have an obligation to provide notice of termination to each other, the purpose for providing this notice is different. Since employees need time to find a new job, the courts require employers to provide them with sufficient advance notice, or wrongful dismissal damages if they fail to.

Reciprocally, employers need sufficient time to find replacements for resigning employees. If an employee provides less notice than the employer reasonably requires to recruit a qualified new hire for that employee’s particular position, the employer is entitled to the losses it suffers from not being provided that advance notice.

Carleton believed, in light of Bradley’s 1 1/2 years of service and his senior position, he should have provided it with six months notice of his resignation. It therefore sued him for wrongful resignation, claiming the profits it would have made had he stayed with the company for that additional period.

The court decided that Bradley needed to provide Carleton with only three months of notice. More important, the Ontario Court of Appeal held that Carleton could not recover all the losses that it incurred because Bradley left the company but only those damages attributable to Bradley’s failure to provide Carleton three months notice. Those expenses included costs of completing the contracts that were in progress during those three months.

Employers who sue employees for resigning without adequate notice can also recover the costs of hiring a replacement, such as advertising expenses, fees to placement agents and other increased costs, such as overtime to employees to ensure completion of the work in which the employee had been engaged.

Wrongful resignation is not new. What is unprecedented is the frequency with which employers are suing departing employees for the disruption caused by their resignations without sufficient notice.

As employers invest increasing amounts in training their employees and those employees, in turn, become more valuable, employers face immediate consequences to their operations when those employees leave and significant costs in recruiting and training replacements.

If a resigning employee provides inadequate notice, employers might do the following:

1. Advise that more notice is required and reach an agreement with the departing employee. This additional notice should be sufficient to give you the necessary time to recruit a suitable replacement or otherwise adapt to the departure.

2. When hiring, include a term that stipulates the notice the employee must provide on resignation, with the option of waiving the notice if it is not necessary or desirable at the time.

3. Immediately commence efforts to replace the departing employee and keep track of all associated expenses.

4. If sued by an employee who has resigned, including those asserting a constructive dismissal, consider claiming damages for wrongful resignation.