Wrongful resignation: Revisiting the employee obligation to provide reasonable notice

In our First Reference blog of February 19, 2015, we discussed an interesting decision out of the British Columbia Superior Court of Justice: Consbec Inc. v. Walker.

The facts (in brief) related to a claim from a family-owned company for a variety of damages related to an employee’s hasty resignation. Among these was the allegation that the Defendant ex-employee failed to provide reasonable notice of resignation (he in fact provided none) and this caused the company to incur damages related to arranging for a replacement.

In the trial decision, the Court found that the Defendant was an important employee in the company’s west coast operations. His failure to provide any notice of his resignation to the employer was deemed unreasonable, thus successfully grounding a claim for damages. Curiously, the Court declined to comment on what would have been a reasonable notice period for resignation. Instead, Justice Hyslop stated:

There is no point in trying to determine the proper notice that Peter should have given Consbec.  All that would do would lead to speculation as to what Consbec would have done and whether the notice was sufficient…

In the end, Justice Hyslop ordered that the Defendant ex-employee pay $56,116.11 to his former employer.

Both sides appealed the trial decision to the British Columbia Court of Appeal. On the question of what would have represented reasonable notice of resignation, the Court of Appeal diverged from the trial judge and commented:

To award Consbec damages, the judge was required to first determine the notice Peter should have given Consbec and then determine what damages, if any, Consbec had proven it suffered due to Peter’s failure to give that notice.

…

[T]he main purpose of the notice requirement is to give the employer a reasonable time to adjust to the employee’s departure.  In determining the appropriate notice period regard should be had to the employee’s duties and responsibilities, salary, length of service, and the time it would reasonably take the employer to have others handle the employee’s work or to hire a replacement.

Based on the trial judge’s finding that Peter was essentially an “estimator” who exercised very little independent authority, I consider a notice period of one month reasonable.  Peter was a “manager” in name only; beyond knowing how to use a computerized spreadsheet his position did not require any specialized skills and training. [emphasis added]

The Court of Appeal also disagreed with the trial judge as to how damages for failing to give notice are to be assessed. While the trial judge had ordered costs related to the employee’s departure, the Court of Appeal narrowed the scope of damages to costs as a result of failing to give proper notice. This small, but important, distinction had dramatic consequences.

In particular, the Court of Appeal limited possible damages to only those for the temporary relocation of an employee to cover the one-month period. As the cost of permanent relocation would have been borne by the company even if the Defendant had provided reasonable notice of resignation, these monies were not recoverable. Thus the potential damages owing to the employer were determined to be $5,875.00, not $56,116.11.

Compounding the loss for the employer, the Court of Appeal further noted that the Company saved $6,083.00 from not having to pay the Defendant’s wages for the one-month notice period. As this amount is greater than the loss associated with the abrupt resignation, the Court of Appeal ordered that while there was a wrongful resignation, no damages were actually incurred.

The outcome in Consbec is another example of why employers should think twice prior to launching wrongful resignation claims (see our First Reference article here for an Ontario example).

This article was originally published on October 18, 2016 by First Reference Talks.

Vey Willetts LLP is an Ottawa-based employment and labour law firm that provides timely and cost-effective legal advice to help employees and employers resolve workplace issues in the National Capital Region and across Ontario. To speak with an employment lawyer, contact us at: 613-238-4430 or info@vwlawyers.ca