Rescinding an Accepted Notice of Resignation, The Law Times (September 17, 2018, p 7)

Resignation is a right personal to an employee. It can neither be imputed to nor imposed on the employee and, thus, must be voluntary. The act of voluntary resignation has a subjective and an objective element. The former is represented by the employee’s intention to sever the employment relationship, while the latter is manifested by an act resulting from that intention, which may consist of a written or verbal notice of resignation or conduct. In English v. Manulife Financial Corporation, 2018 ONSC 5135, the Ontario Superior Court considered the issue of whether an employee can rescind a notice of resignation after it has been accepted by the employer. The court determined that the employee is precluded from resiling an accepted notice of resignation and explained that, in those circumstances, the employer would not have to show detrimental reliance on it.

In English, Elizabeth English, began her employment with Manulife Financial Corporation’s predecessor, Standard Life, in March 2016. On September 22, 2016, English informed her supervisor, Ramnath, of her intention to retire effective December 31, 2016, and provided him with a written notice of resignation. On October 11, 2016, English decided to withdraw an accepted resignation and verbally informed Ramnath of her intention. Ramnath acknowledged English’s request to rescind her notice of resignation, but did not indicate his acceptance of it. Ultimately, on November 25, 2016, Manulife advised English that it would honour her notice of resignation. English continued to work until December 12, 2016, at which point Manulife advised that she need not come back to work. In response, English launched a wrongful dismissal lawsuit, seeking 16 months’ salary in lieu of notice. At the time of her dismissal, English was 66 years of age, served as a Senior Customer Relationship Manager and earned $128,000 per annum.

The court adjudicated English’s claim by way of a summary judgment motion and dismissed her action, without costs. The central issue before the court was whether English could resile from her valid notice of resignation such that she could rescind it effectively at any time right up until December 31, 2016.

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 evincing such an intention. Whether words or actions equate to resignation must be determined contextually. The crux of the inquiry is whether the employee exercised a sufficient degree of independent judgment in the circumstances.

In the present case, the motions judge found that English was neither induced nor coerced to submit her notice of resignation. She typed up the notice herself and submitted it at her own volition. In the circumstances, a reasonable person, viewing the matter objectively, would have understood that English voluntarily resigned.

At the motion, English argued, albeit unsuccessfully, that an employee may resile from a resignation provided the employer has not relied upon it to its detriment. In support of this proposition, English relied on the Court of Appeal for Ontario’s decision in Kieran v. Ingram Micro Inc., 2004 CanLII 4852. The motions judge did not heed Kieran, described the sentence that English relied on as obiter dictum and explained that the “law…has evolved, and is now more a reflection of basic contract law.”

Relying on the Nova Scotia Court of Appeal decision in Kerr v. Valley Volkswagen, 2015 NSCA 7, which was followed by courts in Ontario and Newfoundland and Labrador, the motion judge explained that whether or not the employer relied upon a resignation notice to its detriment is only relevant in cases where the employee’s offer of resignation has not been accepted. Once the resignation has been accepted, the employer’s detrimental reliance upon the resignation is irrelevant.

The motions judge’s decision was grounded in the basic principles of contract law: offer and acceptance. English’s offer in the form of a notice of resignation and Manulife’s acceptance of that offer crystalized an agreement that formed the basis of the parties’ contract to terminate the employment relationship.

English highlights a clear demarcation between two separate legal scenarios. First, the employee is entitled to rescind his or her resignation prior to either its acceptance or detrimental reliance on it by the employer. Second, if the employer has accepted a valid resignation, the employee is precluded from resiling from it and there will be no dismissal, wrongful or otherwise.

English reminds employees that employers’ obligation to pay severance at dismissal as well as their right to wrongful dismissal damages gets extinguished at the time a valid notice of resignation is accepted. Prudent employers should refrain from snapping up a notice of resignation and be mindful that the question of whether a resignation is valid, clear and unequivocal requires a fact-driven assessment of the employee’s conduct and all relevant circumstances of the particular case, which the court will scrutinize.