This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.
A resignation must be clear and unequivocal to end employment. Sometimes employees change their mind and try to rescind a resignation. A recent decision states that when this happens and the employee continues to work for the employer on the same terms and conditions without any interruption, the employee may be deemed to have lost all prior service with the employer.(1)
The employee started working as a hygienist in the employer's dental office in Stoney Creek, Ontario in 1993. At the time of hire, she did not sign an employment agreement. However, due to a number of company restructurings, the employee eventually had to sign several employment agreements, beginning in 1999, in order to remain employed by the company. All of the employment agreements limited her termination entitlements to the minimum standards under the Ontario Employment Standards Act 2000.
On 28 March 2005 the employee tendered her resignation effective 7 July 2005. Prior to the effective date of resignation, the employee told her employer that she wished to continue working at the dental office. The employer was happy to have her continue working and they signed a new employment agreement on 30 June 2005. Between the date that she resigned and 30 June 2005, the employee worked continuously without any interruption. There were no changes to the terms of her employment in the new employment agreement. Like her prior agreements, the new agreement limited her rights on termination to the minimum standards under the Employment Standards Act.
In 2011 the employee signed another employment agreement, which also limited her termination entitlement to the minimum standards under the Employment Standards Act. In December 2012 the employee was dismissed without cause. She was provided with one weeks' pay pursuant to the Employment Standards Act. She sued.
The trial judge held that the 2005 resignation had not resulted in a break in the employee's service. This was because the employer had allowed the employee to rescind her resignation and perform the same responsibilities without any interruption. A letter of support that the employer wrote to help the employee get financing was also relevant because it showed that the employer had viewed the employee's employment as having been continuous since 1993. The judge ruled that none of the employment agreements were enforceable, so he awarded the employee 15 months' notice for her 19 years' service.
The employer appealed. The appeal court held that the unequivocal resignation in 2005 had resulted in a break in the employee's service. In order to be rehired, the employee had had to sign a new employment agreement. The court also held that the new employment agreement was legally binding. As such, the appeal court calculated the employee's service from 2005 (not 1993) and awarded her seven-and-a-half weeks' notice in accordance with the minimum standards under the Employment Standards Act.
It remains to be seen whether this decision will be appealed. However, as it stands, it shows that an unequivocal resignation that is rescinded can result in a break in service. To avoid disputes, employers faced with this situation should seek legal advice. At a minimum, employers should require employees to sign a new employment agreement that specifically states that the employer will not recognise any service before the resignation when calculating length of service and termination entitlements unless required by employment standards legislation – and even then only to that minimum extent.
Endnotes
(1) Theberge-Lindsay v 3395022 Canada Inc (Kutcher Dentistry Professional Corporation).
