Just as an employer has a duty to provide proper notice of termination to an employee they terminate without cause, an employee also owes a reciprocal duty to provide notice of their resignation. Damages for not providing such notice are not often sought because, practically speaking, what the employer can hope to recover is often outweighed by the legal costs necessary to obtain it. However, when such damages are sought, this often comes as quite a shock to the employee, who believed there would be no repercussions for quitting without notice.
Notice is meant to give the employer time to find and train a replacement. Often the notice an employee is required to give is set out in their employment contract. However, when it is not, what is deemed to be reasonable notice will be determined by the following factors:
- The employee’s responsibilities;
- Their length of service;
- Salary; and
- Time it would reasonably take the employer to replace the employee.
In determining the time it would take to replace the employee, the court will look at the nature of the employee’s position and the area of work in which the employer is competing. The court will also consider the time it would take to recruit, train and familiarize a new employee with the employer’s products and clients.
Important to note is that if the employee offers notice of their resignation and the employer terminates the employment before he or she has served this notice period, the courts have held that it is the employer who brought the employment relationship to an end, not the employee. The employer will therefore have to pay the employee damages in lieu of notice.
For Quebec employees, the Supreme Court of Canada recently held that the approach to this issue is similar to that in the common law provinces. If an employee provides notice of termination in accordance with article 2091 of Quebec’s Civil Code, the employer cannot terminate the employment contract unilaterally without giving notice or pay in lieu of such notice.
An employee’s obligation to provide notice of their resignation was recently discussed by the British Columbia Court of Appeal in Consbec Inc. v Walker.
Consbec Inc. is a family-run business. The respondent, Peter Walker, worked for the appellant (Consbec) for 5 years. His position was to solicit blasting and drilling contracts and prepare bids. Peter did not have an employment contract with Consbec.
In 2002, Peter left Consbec for Rock Construction & Mining Inc., a competing business, without giving notice of his resignation.
Consbec commenced an action against Peter for breach of fiduciary duty, breach of confidence, and breach of contract. Peter counterclaimed for constructive dismissal.
The trial judge dismissed the majority of Consbec’s claims and Peter’s counterclaim. However, Justice Hyslop did find that Peter had failed to give Consbec reasonable notice before resigning, and therefore awarded Consbec $56,116.11 in damages. These damages represented the cost Consbec paid in travel and relocation fees to relocate two employees from Ontario to Kamloops.
Court of Appeal
Consbec appealed the decision, stating that the trial judge erred by dismissing Consbec’s claim for breach of fiduciary duty and duties of confidentiality, good faith, and fidelity that Peter owed as an employee.
Peter cross-appealed, stating that the trial judge erred in the manner in which she determined damages for his failure to give reasonable notice.
The Court of Appeal dismissed Consbec’s appeal and allowed Peter’s cross-appeal regarding quantum of damages.
The Court of Appeal confirmed that when determining the quantum of damages, a court must do the following:
- Determine the notice the employee should have given the employer
- Determine what damages, if any, the employer has proven it suffered due to the employee’s failure to give that notice.
The Court of Appeal held that Peter’s notice period should have been one month. This number was based on the trial judge’s finding that Peter was essentially an “estimator” who exercised very little independent authority.
For the second step, the Court of Appeal emphasized that when measuring damages, it is not the cost to Consbec as a result of Peter leaving the company, but the cost to Consbec as a result of Peter’s failure to give notice.
The Court held that it was reasonable for Consbec to send one of their employees to Kamloops to carry on business when Peter unexpectedly left. However, the Court found that Consbec failed to provide proper evidence regarding their expenses. As a result, the Court reduced the damages Consbec was entitled to recover for that one employee to $5,875.
The Court also held that Consbec was not entitled to any recovery costs associated with relocating the second employee, as Consbec would have incurred these relocation costs even if Peter had given one month’s notice.
The Court acknowledged that although Consbec had validly incurred costs as a result of Peter’s failure to give notice, Consbec saved $6,083 by not having to pay Peter’s salary during that period. Accordingly, the Court held that Consbec did not suffer any damages as a result of Peter’s failure to give notice.
Some helpful tips that we can take away from this case are:
- If you want to resign, the first step is to look at your employment contract to determine whether the notice you have to give is set out within it.
- If not, remember that employees nevertheless owe a duty to provide reasonable notice of their resignation to their employer; their position, salary, and length of service will provide guidance as to what that reasonable notice period might be. Employees who are held to be in a fiduciary position will have to provide more notice than a non-fiduciary employee.
- Employers will not be compensated for costs that they would reasonably have incurred regardless of whether the employee gave notice.
- Employers must consider the amount of money they saved by not having to pay the employee’s salary during what should have been their reasonable notice period.
For more information on reasonable notice, contact our Employment Law Group.