In English v Manulife Financial Corporation [English], the Ontario Court of Appeal (“ONCA”) addressed circumstances in which a change in employment circumstances could allow an employee to withdraw a resignation that was seemingly clear and was accepted by the employer, shedding light on when a resignation is truly unequivocal. In October 2018, the Ontario Superior Court of Justice (“ONSC”) delivered a decision that suggested that an employee’s resignation, once accepted by the employer, is final. However, the ONCA has just reversed the decision of the ONSC. In light of the new ONCA decision, employers should carefully consider the circumstances surrounding resignations to determine whether or not they can rely on them.
Ms. English, an employee in her early 60s, decided to retire after Manulife announced that it would be implementing a new computer system for customer information. Ms. English advised her supervisor of her intent to retire in a meeting several months after the announcement was made and provided a letter as formal written notice. During the meeting, Ms. English’s supervisor asked her if she was sure she wanted to retire, to which she replied that she was not totally sure. Her supervisor indicated that if she changed her mind, she could rescind her notice.
Shortly after Ms. English submitted her notice of retirement, Manulife announced that it would indefinitely suspend its conversion to the new computer system. As a result, Ms. English decided to withdraw her notice of retirement. When she let her supervisor know, he did not indicate that she would not be able to withdraw her resignation; however, several weeks later, he informed her that Manulife would not accept her withdrawal of her retirement notice. Manulife had planned to redistribute Ms. English’s responsibilities and eliminate her position after she retired; thus, it told her to not come back to work after the date in her retirement notice.
Ms. English subsequently sued for wrongful dismissal. She argued that her employment was wrongfully terminated when Manulife refused to accept the withdrawal of her resignation because she had the right to retract her resignation notice at any point until she retired.
On a motion for summary judgement, the ONSC motion judge rejected Ms. English’s argument, finding that, because her resignation was clear and unequivocal, she could not unilaterally rescind it (for more information about the initial decision, see our blog on the subject). The judge stated that, after Manulife accepted the retirement notice, a binding contract was formed that could not be resiled from—once a clear and unequivocal resignation is accepted, an employee cannot take it back.
The ONCA Decision
The ONCA overturned the motion judge’s decision on the grounds that Ms. English’s resignation, through her notice to retire, was not unequivocal given the circumstances. Because Ms. English’s decision to retire was motivated by the computer conversion and she had told her supervisor that she was not completely sure she wanted to retire, the ONCA found that her decision was equivocal. The Court stated that when the computer conversion was cancelled and her impetus for retirement disappeared, Ms. English was entitled to rely on her supervisor’s promise that she could change her mind. As such, Manulife was bound by the supervisor’s promise and Ms. English’s termination was a wrongful dismissal.
When it comes to whether or not employees can rescind resignation notices, circumstances matter. Valid resignations must be clear and unequivocal, and English demonstrates that determining whether the notice is clear and unequivocal is fact specific.
Where a resignation is in any way equivocal, employers would be well advised to inquire into the circumstances surrounding an employee’s resignation. If the circumstances dictate that an employee’s resignation is equivocal, employers risk potentially costly damages awards if they try to hold the employee to their resignation.
Where the employee has indicated that the resignation is dependent on a particular factor (e.g., a sale of business, a technological change, a change in compensation, etc.), the employer should inquire into the circumstances. Sometimes, an employee who is resigning will indicate that they feel compelled to do so because of the inappropriate conduct of a coworker or manager. Any such allegations contained in a verbal or written resignation should be addressed as appropriate in the circumstances and in accordance with legal obligations.
To minimize liability associated with an employee attempting to resile from a resignation, employers should:
- request that all resignations be submitted or confirmed in writing;
- ensure that all written resignations are read and assessed for potential factors on which the resignation depends; and,
- if any such factors exist that could make the resignation notice unclear, employers would be well advised to take positive steps to confirm the unequivocal resignation in writing.
Further, employers should ensure that employees know that they will be held to their resignation decisions. Unlike Ms. English’s employer, employers should not allow supervisors to represent that employees may be able to rescind their resignations in the future. If employees do try to withdraw their resignations, employers should advise them clearly and immediately that they will not be able to do so, to ensure that the employer is not condoning the withdrawal of the resignation unintentionally.
By taking positive steps to ensure the resignation is clear, employers can maximize predictability at the end of the employment relationship and therefore minimize any unexpected costs.
This blog is provided as an information service and summary of workplace legal issues.
This information is not intended as legal advice.