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“I quit!” – “not yet, you don’t.” Employer Awarded $35,000 for Wrongful Resignation

By now, we all know what a wrongful termination is in the employment context. But how many have heard of a wrongful resignation? The Superior Court of Ontario recently reminded us that employers are within their rights to bring a wrongful resignation claim against an employee who fails to provide her or his employer with reasonable notice of resignation.

In this case, Gagnon & Associates Inc. (“GA”) hired Barry Jesso (“Jesso”) in 1996 for the shipping/receiving department. Within a year, Jesso had worked his way into a sales role. By 2006, Jesso was one of GA’s top sales associates, himself accounting for approximately 30 per cent of GA’s total sales - earning him $180,000 in salary. Jesso, however, felt he was underpaid and secured replacement employment with a competitor while still with GA.

Jesso gave GA notice of his resignation on July 14, 2006. His resignation was effective that same day and Jesso never worked at GA again.

In the months that followed, some of GA’s clients gave notice that they were taking their business to Jesso’s new employer. GA also had some difficulty finding an experienced salesperson to replace Jesso. 

At trial, GA took the position that Jesso’s failure to provide adequate notice of his resignation prevented GA from implementing an appropriate transition plan, costing the company significant sales. Jesso took the position that he was not a managerial or fiduciary employee and was therefore not required to provide any additional notice of his resignation.

The Court agreed with GA, finding that the reasonable resignation period ought to have been two months and that Jesso’s departure resulted in lost sales:

39.  The notice required of an employee will be a function of that employee’s position with the employer and the time it would reasonably take the employer to replace the employee or otherwise take steps to adjust to the loss. 

40.  Although Jesso was a salesperson with no managerial responsibilities, he was a senior employee with ten years’ experience and was responsible for a significant percentage of GA’s sales.  The evidence at trial established that the market for experienced HVAC salespersons was limited and that a replacement hire could not be made until September of 2006.  In addition, Jesso knew that Comeau, the other senior salesperson would be leaving GA on the same day thereby putting GA in a significantly difficult position.  In these particular circumstances, a notice period of two months would have been appropriate.

The Court awarded GA $35,164 representing the loss in sales suffered by GA over the two month period following Jesso’s resignation.

Take home for employers

According to the Court, a reasonable resignation period is based on the employee’s position, length of service and the time it would reasonably take the employer to replace the employee or otherwise take steps to adjust to the loss.

While the right to bring a wrongful resignation claim against a former employee serves as a strong protection for employers who have suffered a loss resulting from the departure of an employee on inadequate notice, employers are better off protecting against these types of resignations by including language in employment agreements that sets out the precise amount of notice an employee must provide when resigning.

The lawyers at CCPartners are experienced in all aspects of employee terminations and can help you navigate employee resignations, whether proactively at the hiring stage or after an employee has resigned.