The Law of Resignation, Part One: How Much Notice is Required?

The Law of Resignation, Part One: How Much Notice is Required?

For key employees, a resignation can be a devastating blow to an organization. Resignations can affect morale, deadlines, and profits. Replacing valuable employees takes time (and cost money) and talent can be difficult to replace, particularly in the current job market. So, how much notice do employees need to give when resigning? The answer depends on legislation (in some provinces) and contract law.

In some provinces, employment standards legislation sets out the minimum notice an employee must give. For example, in Alberta and Nova Scotia, employees with between three months and two years of service must give one week of notice and employees with more than two years of service must give two weeks. In British Columbia, Ontario and most other provinces, there is no legislated notice of resignation.  These minimums do not prevent employers from requiring additional contractual notice.

Employment agreements can require minimum notice of resignation. However, employers should think carefully before setting long resignation notice. In some situations, such as where the employee is joining a competitor, the employer may want to waive the resignation notice, in which case it will generally be liable to pay compensation over the waived period. Employers may wish to include a right to waive resignation notice and pay base pay instead or even a right to terminate during the resignation notice period on statutory minimum notice or pay in lieu.

Under common law, all employees not governed by a resignation clause have an implied duty to provide “reasonable notice” of resignation. There are few cases on what constitutes “reasonable notice” of resignation but it is clear the notice is generally not as long as the reasonable notice the employer would have to provide if terminating. Generally, in setting the resignation “reasonable notice period”, the court will consider the amount of time that it would take the employer to hire and train a replacement, taking into account the nature of the position and availability of replacement hires or other means of covering the departing employee’s role. Other factors include the departing employee’s responsibilities, length of service and how dependent the employer business is on the employee to operate. A long-serving CEO, for example, may be expected to provide several months of notice, whereas a part-time retail clerk may only be expected to provide a few working days’ notice.

We do not see many “wrongful resignation” lawsuits, despite the fact that many employees give less than their contractual or common law resignation notice. The reason for this is twofold: our courts have consistently said they will not order employees to return to work out resignation notice. This means an employer can only claim damages for wrongful resignation. In most cases, it is either difficult for the employer to prove it has suffered any specific provable financial loss because of the inadequate notice or any loss is modest so not worth pursuing.  It is important to remember that an employer cannot claim expenses to replace the employee, only losses caused by the employee working less resignation notice than required by law. Most such claims involve key professionals whose abrupt departure forces the employer to shut down and lose revenue and profit.

If you want more information on this topic, you can contact us at:

Geoffrey Howard:          ghoward@howardlaw.ca

604 424-9686

Sebastian Chern:            schern@howardlaw.ca

604 424-9688