In the heat of the moment, an upset employee may resign. That does not always mean the employment relationship is ending. To be effective, a resignation must objectively reflect an employee's intention to resign. The British Columbia Supreme Court's decision in Conway v. Griff Building Supplies Ltd., 2020 BCSC 1899, provides guidance about when an employee's resignation will be effective when there is no letter of resignation.
What Happened
The employee in this case had worked for the employer for over 20 years and was a member of the senior management team.
Over the years, the employee indicated to the employer that he wanted to acquire an equity interest in the company. The employee stated several times that if the employer did not accept, he would quit his employment. The employee made a final, formal equity proposal on December 18, 2018.
A few days later, on December 21, 2018, the employer rejected his proposal. The employer asked the employee if he still intended to quit. The employee confirmed that he did. They agreed that the employee would deliver a formal letter of resignation by January 1, 2019 and would continue working until February 28, 2019. On December 28, 2018, the employer told the employee he was no longer required to work but his employment would continue until February 28, 2019.
The employer ended the employment relationship early on January 25, 2019 when it learned that the employee incorporated a company in direct competition with the employer.
The employee sued for wrongful dismissal. The main issue at trial was whether the employee effectively resigned prior to the owner's communication to the employee on December 28, 2018. If not, then the employer conceded that communication would amount to wrongful dismissal.
What did the Court Decide
The court dismissed the employee's lawsuit. It decided that the parties agreed at the December 21, 2018 meeting that the employee was resigning his employment effective February 28, 2019. The court said that the resignation letter that was to be delivered by the employee by January 1, 2019 was merely a formality.
The court explained how to make a decision in a case like this. First, the court had to examine the parties' words and conduct on December 21, 2018 from the perspective of a reasonable third party who has knowledge of the surrounding circumstances known to both parties. The employee's subjective understanding of what happened was legally irrelevant. Second, if the parties' intentions were not clear from their words or conduct, then the court could consider their conduct after the December 21, 2018 meeting, but only if it clearly revealed their intention.
The court decided that the parties' words and conduct at the December 21, 2018 meeting were not determinative. As a result, the court considered, and found, that the parties' subsequent conduct after the meeting clearly revealed that the employee agreed to resign effective February 28, 2019.
The court relied on the fact that the employer took immediate steps to notify employees and customers that the employee was resigning following the meeting. The employer did not wait to receive the anticipated letter of resignation. The employee was aware of these steps within hours. He did not tell the employer, or anyone else, that he had not yet agreed to resign.
Takeaways For Employers
A court will assess the circumstances at hand in order to determine whether an employee has resigned. While a resignation letter is helpful confirmation of a resignation, it is not necessarily required. It is only one factor a court will consider when determining whether an alleged resignation objectively reflects the employee's intention to resign.
The court's decision emphasizes the importance of the employer's and the employee's words and conduct surrounding the alleged resignation, and affirms that conduct following a resignation, such as notifying other employees and customers, can support a finding of resignation.
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