Canadian HR Reporter

CANADIAN HR REPORTER SEPTEMBER 2019 6 NEWS legal issue of when an unequivo- cal notice of resignation may be rescinded by an employee. However, one of the Nova Sco- tia decisions (referenced above), in which that legal issue was ad- dressed, is worth noting (the 2014 Kerr v. Valley Volkswagen deci- sion). Essentially, a long-standing employee threatened to quit if he wasn't given a raise. e employer declined to give the raise and "ac- cepted" the employee's resignation. e employee asked the employer to reconsider but the employer re- fused to do so. e employee sued for wrongful dismissal. ere was a factual dispute over whether the employee's initial threat was idle or real. e court found it was real, based in part on corroborating evidence from other employees who testified the employee had expressed unhap- piness with his pay for some time and was already in the process of securing other employment for a higher salary. e employee ar- gued that even if his ultimatum constituted resignation, he had resiled from it before his employer acted on it to its detriment. e court rejected that argu- ment for the following reasons: "e retraction of a clear notice to quit must occur and be com- municated to the employer be- fore the employer communicates acceptance of the resignation to the employee. is is a contracts case. Even taking into account the special protection of employees under employment contracts, it should not be open to an employ- ee to unilaterally retract an offer to quit once it has been accepted and that acceptance is communicated to the employee by the employer." is legal analysis was affirmed by the Nova Scotia Court of Ap- peal in 2015: "e appellant reads this pas- sage as saying that the employer must show detrimental reliance in order for a resignation to ever bind the employee. Respectfully, this is not the law. e passage from Ball quoted above, and the jurisprudence upon which it re- lies, only provides for resilement in situations where the resigna- tion has not been accepted by the employer. If the resignation has been accepted, an employer's detrimental reliance upon the resignation is irrelevant. Mr. Kerr has not provided any authority in which an employee was allowed to resile from an accepted resig- nation. Nor am I aware of any. As I will explain, there are a number of cases in which an employee has been allowed to resile from an of- fer of resignation, but in each case, the resilement occurred prior to the acceptance of the offer." Ariss v. NORR Limited Architects & Engineers - Resignation at em- ployer's behest not enforceable In this 2019 decision, the Court of Appeal reaffirmed that a resig- nation must be genuine to be en- forceable, and any attempt to force a resignation to create a break in service may not be enforceable. John Ariss began his employ- ment at an architectural firm in 1986. In 2002, the firm was bought by NORR Limited Architects & Engineers and Ariss' employment was terminated. However, on that same day, he was hired by NORR on terms that limited Ariss' en- titlement upon termination only to the minimum statutory entitle- ments under the Ontario Employ- ment Standards Act, 2000 (ESA). A similar employment agreement was signed in 2006 when Ariss requested and was provided an increase in weekly hours. In 2013, Ariss requested and ne- gotiated a move from full-time to part-time work. NORR agreed but only if Ariss resigned from his full- time position and accepted a "new offer of employment for part-time hours" in which he waived any en- titlement to notice or severance on account of his employment prior to 2013. With the benefit of inde- pendent legal advice, Ariss agreed. In 2016, Ariss was terminated without cause and provided with his ESA minimum entitlements, based on his 2013 "new" hire date. At the time of his termination, he had been employed by NORR and the previous employer for an ag- gregate of 30 years. He brought an action for wrongful dismissal claiming an entitlement to com- mon law reasonable notice based on the 30 years of service. e motion judge found Ariss had been continuously employed since 1986 and awarded him the equivalent of eight weeks' notice and 26 weeks' severance pay under the ESA (the maximum amount allowable). With respect to Ariss' "resignation" and rehiring in 2013, the judge found this was "an en- tirely artificial attempt to create an interruption in employment when in fact there was none." e Court of Appeal upheld the ruling of the motion judge. Specifi- cally, on the issue of Ariss' purport- ed resignation and rehire in 2013, the court held NORR's efforts to create a break in the employment relationship was an attempt to ille- gally contract out of the minimum entitlements under the ESA. However, this illegality did not vitiate the 2006 contract in which had Ariss waived his entitlement to common law reasonable notice. e waiver of common law rea- sonable notice therefore remained valid and binding. According to the court, Ariss "fully understood, both when working full-time and when working part-time, that his entitlements on termination would be in accordance with the ESA." eberge- Lindsay v. 3395022 Canada Inc.: Rehire post-resig- nation is new employment From this decision, we learn that if a resignation is clear, unequivocal and voluntary, acceptance of it by an employer may be sufficient to create a binding agreement, and any subsequent employment with the same employer (meaning the employee changes her mind) is a fresh employment relationship. Jasmine Theberge-Lindsay began working as a dental hy- gienist for the defendant dentist and its corporate predecessors (Dr. Kutcher) in 1993. In 2005, eberge-Lindsay provided two months' notice of resignation but, prior to departure, changed her mind and indicated she wished to remain employed. Dr. Kutcher agreed, provided eberge-Lind- say execute a new employment agreement which limited her ter- mination entitlements to the ESA minimum amount. Theberge- Lindsay had executed two similar agreements during her tenure from 1993 to 2005. The new agreement was ex- ecuted and Theberge-Lindsay's employment continued without interruption until 2012, when her employment was terminated and she sued for wrongful dismissal. e trial judge held eberge- Lindsay had not received consid- eration for the earlier employment agreements and, thus, they were unenforceable. She was awarded 15 months of damages in lieu of common law reasonable notice. On appeal, the employer ar- gued the 2005 agreement was enforceable and served to limit eberge- Lindsay's entitlement to her ESA minimums, calculated on the basis of her 2005 "rehire" date — not on her entire period of service. e Court of Appeal agreed, concluding "Theberge- Lindsay's unequivocal resigna- tion and rehiring in 2005 marked a break in the employment relation- ship after which an entirely new contract was reached between her and Dr. Kutcher." Tips for employers If you're scratching your head, try- ing to rationalize these decisions, you're not alone. To help you sift through it all, consider the follow- ing take-aways: • Notice of resignation or retire- ment must be clear and un- equivocal: A hastily given no- tice of resignation or retirement, or one given with qualifications, may not be upheld by a court. It is a fact-driven analysis, based on an objective standard. e court must be satisfied, given all the surrounding circumstances, that a reasonable person would understand by the employee's ac- tions that they had resigned. An employer that does not carefully consider all of the surrounding facts, or chooses to act willfully blind, does so at some risk. For example, if an employee, in a state of frustration or emo- tional angst makes a hasty state- ment that they quit and, shortly thereafter, realizing the rashness of this statement or action, ei- ther retracts it in short order or engages in discussions with the employer to patch up the dis- pute leading to the declaration of intent to quit, a court may find the employee did not quit. On the other hand, when the words or actions of an employ- ee demonstrate a clear intent to resign, either unconditionally or as part of an ultimatum, courts have not hesitated to find the employee quit. • Notice of resignation must be genuine to be enforceable: Any attempt to use a resignation as a means of providing a "break in service" may not be enforce- able. However, if an employee provides clear and unequivocal notice of resignation but later has a "change in heart," a court may treat any period of sub- sequent employment as "new employment" for termination entitlement purposes. • Acceptance of a resignation may be sufficient to create a binding agreement: If there is a clear and unequivocal no- tice of resignation, an employer should be able to accept and rely on the resignation without doing anything more. It is gen- erally not open to an employee to unilaterally retract an offer to quit once it has been accepted and that acceptance is com- municated to the employee by the employer. To minimize the possibility of disagreement or misunderstanding, an employer should "accept" a resignation in writing (and also consider taking a step or action in reliance on it). Sundeep Gokhale and omas Gorsky are lawyers with Sherrard Kuzz LLP, one of Canada's leading employment and labour law firms, representing management. Sundeep and Tom can be reached at (416) 603-0700 (main), (416) 420-0738 (24-hour) or by visiting www.sherrardkuzz.com. Notice of termination must be clear, unequivocal RESIGNATIONS < pg. 5 If an employee provides clear and unequivocal notice of resignation but later has a "change in heart," a court may treat any period of subsequent employment as "new employment" for termination entitlement purposes. 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