In Carroll v. Purcee Industrial Controls Ltd, 2017 ABQB 211, the Court of Queen’s Bench of Alberta recently decided whether requesting a severance package amounted to a resignation. The main issue before the Court was whether the plaintiff was dismissed or had resigned from his employment.
Mr. Carroll worked for the defendant companies in Calgary, Alberta, and later in Madagascar, for four years and eight months. His responsibilities included sales and business development. There was no written contract between the parties.
In 2012, following the near completion of one of the projects, business started to decline. At this time, the relationship between Mr. Carroll and his employer also started deteriorating.
In August 2012, Mr. Carroll tendered his resignation and requested a fair severance package. His employer rejected the resignation, following which Mr. Carroll continued to conduct business for his employer.
In May 2013, after strained communications, Mr. Carroll advised his employer he wished “to terminate employment on professional terms”, and outlined his proposed terms of severance.
On June 4, 2013, Mr. Carroll followed up with his employer. His employer advised him that he would be ready to discuss the matter in a couple of days. Mr. Carroll responded that he was planning to move back to Canada with his family in July.
Mr. Carroll’s employment ended on June 7, 2013, when his employer purported to accept his resignation.
At trial, Mr. Carroll claimed his employment was terminated without cause and he was entitled to damages in lieu of reasonable notice. The defendant claimed Mr. Carroll voluntarily resigned from his employment.
Is the resignation clear and unequivocal? A two-part test
The Court first summarized the legal principles on termination, which allow an employment contract to be terminated at any time by either the employee or the employer for any reason. If an employee is dismissed, the employer must provide reasonable working notice or pay in lieu of notice. An employee who voluntarily resigns has no remedy through a wrongful dismissal claim. Therefore, an effective and binding resignation must be clear and unequivocal.
The Court then reviewed the two-part test for determining whether a resignation is “clear and unequivocal”, which involves both a subjective and objective component. The subjective component focuses on whether the employee intended to resign. It takes into account the employee’s state of mind and his or her conduct in relation to that state of mind. The objective component focuses on what a reasonable employer would have concluded about the employee’s intentions. It is assessed based on the employee’s words, acts, and specific circumstances.
The Court analyzed Mr. Carroll’s words contextually, and concluded they were “an emotional reaction”. The Court found that Mr. Carroll’s purported resignations “were all done from a place of upset and frustration”, although they were not spontaneous declarations said in the heat of the moment. Each time Mr. Carroll expressed his intention to resign, he invited his employer to negotiate the terms of his termination, including a severance package. Mr. Carroll never indicated to his employer that he intended to resign on a specific date without a severance package. Mr. Carroll’s proposed terms of termination were never accepted by his employer. In addition, Mr. Carroll’s employer never followed up with him to confirm that “he truly intended to resign”.
Based on these facts, the Court found that Mr. Carroll’s resignation was not clear and unequivocal, but rather an invitation or proposal to discuss the terms of his termination. The Court concluded that Mr. Carroll was dismissed without cause and entitled to damages.
Employers must take steps to confirm employee resignation
This case emphasizes the importance for an employer to take steps to ensure an employee’s resignation is clear and unequivocal, rather than assuming it is. The Court’s decision is consistent with other recent decisions that place the onus on the employer to determine the employee’s true intentions.
Employers do not owe a “paternalistic duty” to employees. However, depending on the circumstances, it may not be reasonable for an employer to conclude that an employee has resigned solely based on the employee’s conduct or statements that he or she wishes to resign.
Case law suggests that it is good practice for employers to inquire and follow up with the employee to confirm or clarify whether the employee truly intends to resign. Employers should also ask for written confirmation of the resignation. Before accepting the resignation, employers should give the employee an opportunity to discuss any conflicts or issues that may have caused the employee to resign.
If an employer receives an offer from an employee to negotiate a severance package, the employer can either negotiate the terms of the cessation of the relationship or refuse to accept the offer.