eCaseNote 2015 No. 05

If an Employee Quits, is that the End?
Employee Resignations and Employer Responsibilities

Evans v. Avalon Ford Sales (1996) Limited, 2015 NLTD(G) 100

Good faith dealings with employees, throughout the employment relationship and into dismissal, have been recognized as an important employer obligation. However, this recent decision in our Province extends these responsibilities into the area of employee resignation. A look at the facts and decision of this case can provide valuable considerations for employers.

Mr. Evans (the “Employee”) worked as a fleet manager at a car dealership for over 12 years. He made an error in a commercial sale of a vehicle, after which he admitted his mistake and took responsibility; however, the dealer principal and franchise owner (the “Employer”) called a meeting with the Employee and other two managers, criticizing the Employee and using profanity. The Employee became stressed and agitated, telling one of the other managers that he was done. He then came back later that evening, dropped his keys and cell phone off on the manager’s desk, said “I’m done”, and left. The Employer was angry after receiving this information as he assumed the Employee was leaving during a busy time of the year to work for a competitor. Four days later, the Employee saw his doctor who diagnosed him with an acute stress reaction. Later that day, the Employee and Employer met, but the meeting did not go well. The Employer even tossed the Employee’s medical note in the garbage and told him to le ave. The Employee was unable to qualify for short term disability as the Employer indicated that the Employee had quit on his record of employment.

Justice Butler found that there is an implied term of good faith and fair dealings in the employment contract on the part of both employees and employers. She went further to state that as a general doctrine of contract law, there is also a general duty of good faith.

An employee’s resignation must be voluntary and unequivocal. The employer has the burden of proving that the employee voluntarily resigned. The test for voluntarily resignation is stated as: “did he intend to resign and did his acts and words, objectively viewed, support a finding that he resigned?”

Voluntariness. The facts supported the objective and subjective conclusion that the Employee resigned at the moment of depositing his keys and cell phone on the manager’s desk. However, it was found that voluntariness can be undermined in highly emotional situations. Butler J. also took the following factors into account when determining that the resignation was not voluntary: health history, personality and sensitivity, and circumstances surrounding the resignation, including the stress he was experiencing.

Clear and unequivocal. After depositing his items and telling the manager that he was done, the Employee saw his doctor, met with the Employer, made other efforts to correspond and applied for short term disability. Thus, the resignation was neither unequivocal nor clear. Butler J. extended this even further, stating at paragraph 95:

“Had I found the Plaintiff to have voluntarily resigned, I acknowledge that he would then be entitled to argue that he was entitled to a reasonable period to change his mind and that the employer had an obligation to make enquiries.”

An employer must act with consideration at the time of a dismissal or a resignation. In determining whether there had been a breach of good faith and fair dealings, the court will look at whether the employer acted fairly, reasonably and sensitively toward the employee. Resignations cannot always be taken at face value and some time for the employee to reconsider is necessary.

In this case, the Employer was hasty in his mistaken conclusion that the Employee was quitting to join a competitor. The court stated that, where there is uncertainty or confusion during a resignation, both the employer and the employee have an obligation to take further steps to fully understand intentions. At paragraph 113, Butler, J. also stated:

“… the duty of good faith on the employer in these circumstances would require the Defendant to permit the Plaintiff to explain his situation and allow him to take time to reconsider his actions and statements and potentially discuss options for continued employment (including modified duties).”

It was held that the Employer’s mistaken conclusions and failure to let the Employee cool off was a breach of an implied fundamental term of good faith and fair dealings. This would be a breach whether the resignation was voluntary or involuntary. Therefore, it was determined that the Employee was constructively dismissed, and damages were assessed against the Employer accordingly.

What This Means for Employers
In the case of a potential resignation, employers should give the employee a reasonable period of time to reconsider, and to ask them more about their decision. Employers must be respectful, civil, and act with consideration during all stages of the employment relationship, including the end.

This will be an interesting case to track as a Notice of Appeal has been filed.

The comments contained in this eCaseNote provide general information only and should not be construed as legal advice or opinion. For more information or specific advice on matters of interest, please call our offices at (709) 579-2081.