The amount of notice owed to a terminated employee is a central element of most employment disputes. In the absence of a written agreement, employees terminated without cause are typically entitled to notice that is “reasonable,” giving consideration to such factors as their age and length of service, the nature of their position and the availability of similar employment.
However, a recent case serves as a valuable reminder that employees owe a similar obligation to their employers when they resign.
The dispute in Consbec vs. Walker began after Peter Walker – Consbec Inc.’s former western division manager – resigned without notice, started his own company and began competing with Consbec. Walker did not have a contract that set out the amount of notice he was required to provide. At trial, Consbec advanced several claims, including that Walker was competing unfairly and had misappropriated confidential information. While these claims would be dismissed, BC Supreme Court would uphold Consbec’s claim for damages arising from Walker’s failure to provide notice of resignation.
Noting that employees are obligated to provide reasonable notice of resignation in order to allow their employers the opportunity to adapt to their departure, the court found that by resigning “effective immediately,” Walker had deprived Consbec of the opportunity to do so and, as such, was liable for the damages incurred by Consbec.
In assessing damages, the court looked to the costs incurred by Consbec when it brought in employees to replace Walker. Because Consbec did not have time to seek out and hire a new employee, it was required to transfer two of its existing employees from its Ontario location and incurred significant costs in the course of doing so. These costs included reimbursements for mileage, per diems and moving costs.
The court observed that had Walker given reasonable notice of resignation, Consbec may have been able to avoid incurring such costs. However, because he failed to do so, the court held Walker liable to repay Consbec the relocation costs incurred, which totalled over $56,000.
Key lessons for employees and employers
For employees and employers alike, there are several lessons that can be taken away from this case. The most obvious one is that even in the absence of a written contract, employees may be liable to their employer if they resign without providing reasonable, or any, notice. However, there are other considerations to keep in mind as well:
•In determining what constitutes reasonable notice of resignation, consideration will be given to an employee’s responsibilities, length of service, salary and the time that it would take the employer to adapt to the employee’s departure.
•To substantiate a claim, an employer must be able to establish that it has incurred damages due to the employee’s failure to provide adequate, or any, notice of resignation.
•In assessing damages, the court will not give consideration to lost corporate earnings, but rather will give consideration to costs incurred as a result of having to adapt to the employee’s departure in the absence of adequate, or any, notice of resignation.
As can be seen from this case, disputes over an employee’s obligation to provide notice of resignation, particularly in the absence of a written employment agreement, are heavily fact-dependent, time-consuming (Walker resigned in 2002, and the court did not release its decision until 2014) and expensive. Employers and employees would be well served by entering into agreements detailing the notice that must be provided upon resignation.
