Can an Employee Back Out of a Resignation?
Not if the employer has accepted the resignation.
If a long-term employee is dismissed without notice, the employer will likely owe a substantial payment upon termination. But if that employee quits, the employer will owe nothing. That’s what was at stake in one recent Ontario case where the court considered whether an employee could rescind her resignation.
English v. Manulife Financial Corporation, 2018 ONSC 5135 (CanLII).
The employee had given her employer written notice of her intention to retire at the end of the year. But, a few weeks later, she changed her mind. Unfortunately, the employer told her they would “honour her notice of resignation.”
She sued for wrongful dismissal. The employer argued that she quit. The employer won. The court held that the employee wasn’t allowed to rescind her resignation in the circumstances.
The rule clarified by Justice Edwards is that, once an employer accepts an employee’s resignation, it is binding.
This is said to flow from rules of contract law which say, in order to bring a contract to an end, the parties to the contract merely need to agree. There will be a binding agreement to terminate the employment relationship once a valid “offer” is “accepted.”
“Offer and Acceptance” in the Context of Quitting a Job
Transplanting the language of “offer and acceptance” from the law of contract formation and applying it in the realm of employment termination is somewhat awkward. The following scenarios may clarify some confusion.
1. Employer Accepts (Can’t Change Your Mind): In the case before Justice Edwards, the employee “offered” to resign by giving advanced written notice of her anticipated retirement at the end of the year. The employer communicated acceptance prior to the employee’s change of mind. Once acceptance was communicated, the employee could no longer rescind her resignation.
2. Employer Rejects (Can Change Your Mind): An employer could also communicate its rejection of a notice of resignation. The ability to notionally “reject” a resignation should not be confused for a rule that employees need “permission” to resign from a job. An employer may reject notice of resignation because it would prefer to have more advanced notice of the employee’s departure. The employer may convey its “rejection” by asking the employee to stay longer. But its ability to “reject” a notice is not tantamount to an entitlement to force the employee to stay longer. If the employee leaves on the earlier date, the employer’s only remedy is to sue for losses that flow from the short notice (if it was so unreasonably short as to constitute a breach of contract). But in most cases, the employer’s losses will be too nominal to be worth pursuing in court.
When an employer rejects a notice of resignation by asking the employee to stay longer, it is consistent with the applicable principles of contract law that the employee would be free to change his mind entirely and rescind his notice of resignation altogether.
This follows from the common law rule of contract formation that a rejection or counter-offer will destroy the power to accept the original offer. The original “offer” is off the table and there is no binding agreement; the employee can change his mind.
3. Employer is Silent (Can Change Your Mind If No Detrimental Reliance): An employer might be silent after receiving a notice of resignation. During this period of silence, an employee is free to change his mind and retract the resignation, so long as the employer has not “detrimentally relied” upon the notice in some way.
4. Employer Capitulates (Can Change Your Mind If Employer Lets You): An employee who is stuck with an employer’s acceptance of his resignation can hope the employer will allow him to renege. In law, this is referred to as “desperately begging for your job back.”
A merciful employer may choose to let an employee keep his job, but the employer is under no legal obligation to do so. If an employer does restore the status quo, the employer likely won’t be able to later rely on the aborted resignation to avoid paying termination pay.
[EDIT: In a June 7, 2019 case, the Court of Appeal found that there was a “break” in employment when an employer allowed an employee to retract her previously-accepted resignation. Even though she never stopped working, her employer had insisted upon her signing a new employment contract as a condition of retracting the resignation. Terms in the new contract did validly reduce the amount of termination pay the employer would otherwise have had to pay. Read more about that case here.]
5. Employer Says Leave Early (No One Cares What’s In Your Mind): An employer who receives advanced notice of an anticipated resignation date may tell the employee to leave early. This converts the resignation into a termination. The employer will have to pay termination pay. Although the termination pay owed is likely capped at only the value of the pay the employee would have earned up to the anticipated resignation date or,
possibly less, if the employee’s entitlement to notice of termination only extended to an earlier date than some more far flung resignation date; or
possibly more, if the employee’s minimum termination entitlements under the Employment Standards Act extend beyond the anticipated resignation date.
6. Costanza: If all else fails, just pull a Costanza and show up to work.
Clear and Unequivocal
A notice of resignation must be “clear and unequivocal” to bind an employee. An employer can’t latch on to some vague expression or nebulous gesture to argue an employee has quit. Still, it only takes a few words communicated between employer and employee to dramatically impact the parties’ entitlements. Don’t quit your job in a momentary rage. You can’t always change your mind.
[Edit: On July 19, 2019, the Court of Appeal for Ontario overturned the lower court in English v. Manulife Financial Corporation, 2019 ONCA 612. The Court of Appeal didn’t disagree with the substance of the lower-court judge’s analysis about the law on retracting resignations. Instead the Court of Appeal focused on the threshold question of whether the employee in that case had given an unequivocal resignation in the first place. The court concluded that she had not given an unequivocal resignation. The employer therefore had no legal basis to insist upon “honouring” the resignation.]