By Sean Marzinzik.
The BC Supreme Court recently had the opportunity to consider whether an employee’s verbal resignation was effective, or whether the employee’s subjective intentions had to be taken into account as well (Conway v. Griff Building Supplies Ltd., 2020 BCSC 1899).
Background
Mr. Conway was a long-term (20 year) employee who had been attempting to persuade his employer, Griff Building Supplies Ltd. (“Griff”), to give him an equity stake in the business. He told Griff multiple times that he might resign if things did not go his way.
Griff heard his proposals but ultimately declined his offer at a meeting in December 2018. As a result, Mr. Conway resigned verbally at that meeting. The parties agreed he would provide a resignation letter within two weeks and he would work at Griff for two more months (the notice period).
Following the meeting, Griff informed staff and clients of Mr. Conway’s departure. Mr. Conway himself acknowledged to staff that he was leaving. Following some correspondence, Griff informed Mr. Conway that he was no longer required to work out the remainder of his notice period and requested he return any company property, which he did.
The following week, Mr. Conway incorporated a new company in competition with Griff, at which time Griff advised Mr. Conway it was terminating his employment for cause. Mr. Conway sued Griff for wrongful dismissal.
Trial
At trial, the plaintiff argued that his decision at the December meeting was not intended to be final until he delivered a letter confirming his resignation and that Griff “snapped at his resignation before he was fairly and truly committed.”
Griff, on the other hand, maintained that Mr. Conway’s offer to resign during the meeting and Griff’s acceptance was of immediate legal effect and that any future written confirmation was merely a formality.
In its analysis, the Court summarized the law relating to the termination of employment contracts and recent decisions outlining categories of terminations. The Court concluded that the resignation in question was a “resignation by amendment”: that is, both parties negotiated a change to the existing employment agreement such that Mr. Conway’s employment would end after a mutually agreed upon notice period.
In considering what happened at the December meeting, the trial judge explained that the Court was required to “examine the parties’ words and conduct…from the perspective of a reasonable third party who has knowledge of the surrounding circumstances known to both parties.” In other words, Mr. Conway’s subjective intention during the meeting was irrelevant.
The court explained (at para. 70):
Viewed in isolation, the parties’ agreement at the meeting is ambiguous because it is unclear from the discussion at the meeting, viewed in isolation, why a letter of resignation was required. If the letter was purely a formality, then it is unclear why Mr. Conway would need ten days to prepare it, even allowing for the disruption of the Christmas holiday.
However, the parties’ conduct following the meeting cleared up any such ambiguity. Griff did not wait for the letter to begin preparing for Mr. Conway’s departure and Mr. Conway himself did not object to anyone that he had not yet agreed to resign. In fact, he told other employees that he was working with Griff on a transition plan.
As for Mr. Conway’s setting up his own business in competition with Griff while still employed, the court found that this was a breach of the parties’ (amended) employment agreement. This breach amounted to a repudiation of the agreement which Griff was entitled to accept, bringing the agreement to an end before the completion of the notice period. As a result, Mr. Conway was not entitled to any damages.
Takeaway for Employers
This case is a good example of the need for clarity in the context of workplace relationships.
The fact that such a (seemingly) simple conversation about an employee’s resignation resulted in litigation is an important reminder for both employers and employees to communicate as clearly and directly about key issues relating to the employment contract. Where ambiguity exists, it could be up to the courts to resolve it – in which case, they will consider the surrounding conduct of the parties.
It is also wise for employers to seek legal advice regarding any termination of employment, even resignations, to ensure that they have responded appropriately and done what they can to safeguard against future claims from former employees.
