What Happens if an Employee Resigns from Their Job in Ontario
Resigning from a job is a significant life decision, one that can bring about various legal, financial, and personal implications. Whether it’s for personal reasons, a better career opportunity, or dissatisfaction with the work environment, understanding the consequences of resignation is essential. If you are considering resigning from your job or managing an employee resignation, knowing your rights and responsibilities can prevent confusion and help both employees and employers navigate the process smoothly.
This guide explores what happens when an employee resigns, the potential legal implications, and the role of an employment lawyer in Toronto or a wrongful dismissal lawyer in such situations. It covers everything from resignation procedures to severance packages, addressing the rights of both parties involved.
What Does Resignation Mean?
Resignation refers to an employee’s voluntary act of an employee deciding to leave their job (that is, to “quit” their job). This can be done by submitting a formal resignation letter or simply notifying the employer about the intent to quit. Unlike termination, which is initiated by the employer, resignation is initiated by the employee.
However, to be considered a legally valid resignation (that is, one where an employee will have hard a hard time withdrawing if they later change their mind and want to keep their job), it must be “clear and unequivocal” and not made simply in the “heat of the moment”. As the courts have said:
“A valid and enforceable resignation must be clear and unequivocal — to be clear and unequivocal, the resignation must objectively reflect an intention to resign, or conduct evidencing such an intention … Whether words or actions equate to resignation must be viewed contextually — the totality of the surrounding circumstances are [sic] relevant to determine whether a reasonable person, viewing the matter objectively, would have understood the employee resigned … Whether a resignation is clear and unequivocal requires a fact-driven assessment of all relevant evidence.”
Key Considerations for Employees When Deciding to Resign from their Job
Before submitting a resignation, it is important for an employee to consider several factors:
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Employment Contract: Reviewing the employment contract is critical before resigning. Some contracts include clauses about resignation, such as non-compete clauses or restrictions on working with competitors. Employees should be aware of these provisions to avoid legal disputes post-resignation.
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Notice Period: In most employment contracts, employees are required to provide notice before quitting. This notice period could range from one week to a few months, depending on the terms of the employment agreement. Failing to adhere to this notice period could result in potential legal issues or financial consequences.
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Resignation Letter: While a verbal notice may suffice, it’s always advisable to provide a formal resignation letter. This serves as a written record of the employee’s intent to resign and the effective date of departure. The letter should be professional, expressing gratitude for the opportunity and explaining the decision briefly.
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Final Pay and Benefits: Upon resignation, the employee is entitled to receive their final paycheck, including any unused vacation days, bonuses, or commissions. The employer may also have to provide continued health insurance or retirement benefits, depending on the employment contract.
Legal Implications of Resignation
While resignation is a voluntary decision, there are some important legal considerations both the employee and employer must be aware of.
Notice Period and Its Enforcement
As mentioned earlier, employees are often required to provide notice before leaving their position. The standard notice period is typically outlined in an employment contract, but if no such agreement exists, there is no legal requirement (like there is for an employer’s termination of employment under the Ontario Employment Standards Act, 2000). Rather, it would be based on common law factors,
Failure to comply with these notice requirements may entitle the employer to seek damages from the employee in the form of a wrongful resignation claim (although this is relatively very rare). This can be particularly relevant if the employee’s sudden resignation leaves the employer in a difficult position, such as being unable to fill the role quickly. In some cases, an employment lawyer in Toronto may be needed to resolve disputes regarding breach of notice.
Severance Pay and Entitlements
While an employee resigning typically is not entitled to termination pay or severance pay (i.e., severance package), there are situations where resignation might trigger such entitlements. For instance, if an employee is constructively dismissed (meaning that their resignation was effectively forced by the employer’s conduct), they may be entitled to severance.
Constructive dismissal occurs when an employer’s actions or inactions create an environment that forces the employee to resign. Examples of constructive dismissal include:
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major changes to job duties or position
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workplace harassment or discriminatory behaviour
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unpaid wages or benefits
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unsafe or hazardous working conditions that are not addressed by an employer
If an employee believes they were forced to resign due to these actions, they may have grounds for a wrongful dismissal claim. In such cases, consulting a wrongful dismissal lawyer is highly recommended to determine if they are entitled to severance or damages.
The Impact of Resignation on Benefits and Pension Plans
In some cases, resignation can affect the employee’s benefits. For example, health insurance, stock options, or pension plans may be impacted when an employee voluntarily quits their job. Employees should verify with their employer or HR department whether they are eligible to continue receiving benefits post-resignation or if they need to make arrangements for continuation, as well as review their employment contract, bonus plan, stock option plan or pension benefits plans with an experienced employment lawyer to properly understand any impacts of resignation on their ability to receive full compensation.
Employer’s Rights and Responsibilities
When an employee resigns, the employer must adhere to certain procedures:
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Accepting the Resignation: The employer must formally accept the resignation and confirm the effective date of resignation. The employee may also be asked to participate in an exit interview.
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Paying Outstanding Wages and Benefits: Employers are legally obligated to pay employees for all outstanding wages, vacation days, and other benefits as of the resignation date.
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Severance or Compensation: Generally, if an employee voluntarily resigns from their job, they are not entitled to receive any termination pay or severance pay (that is, a severance package). However, this situation should be contrasted with circumstances where an employer wrongfully dismisses an employee from their job, or where the employee has a valid constructive dismissal claim against the employer.
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Non-Solicitation and Confidentiality Agreements: Employers should remind employees of any non-solicitation or confidentiality clauses that apply post-resignation, which are important to protect a company’s business interests.
Final Thoughts on Resigning from a Job
Resigning from a job is a significant career decision that can carry both legal and financial implications. Employees must understand their rights, responsibilities, and the potential consequences of resignation, including the risk they will be forfeiting their right to receive financial compensation in the form of a severance package and employment insurance (EI) benefits. Whether it is regarding the notice period, final pay, or the impact of non-solicitation clauses, seeking professional advice from an employment lawyer in Toronto or a wrongful dismissal lawyer can help navigate these complexities.
For employers, it is crucial to manage the resignation process correctly to avoid disputes and ensure compliance with employment laws. Both parties should approach resignation with careful consideration, ensuring a smooth transition for everyone involved.
If you’re facing a resignation or potential wrongful dismissal scenario, consulting with employer counsel can provide clarity on the next steps, protecting your interests and ensuring that all legal obligations are met.
For many employers, termination of employment is a difficult and confusing time, especially when it comes to drafting severance packages. Therefore, in a wrongful termination of employment, it is important for employers to consult with an experienced Ontario employment lawyer for a severance package review to understand the impact of wrongful dismissal on pension plans. If you are an employer or employee needing to speak with an experienced Ontario wrongful dismissal lawyer to discuss your options and next steps on how to deal with workplace issues, call Bune Law, employment law firm in Toronto. You will review and get guidance on your severance package before you agree to sign any termination documents, and help ensure that your severance package is fair and reasonable.