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Employee Liable for Failing to Provide Reasonable Notice of Resignation
April 19, 2016
Author(s): Lou L. Poskitt

A former sales employee was recently ordered to pay over $35,000 to his former employer because he failed to provide reasonable notice of his resignation.

The defendant, Mr. Barry Jesso, was one of Gagnon & Associates Inc.’s top performing sales associates. At the time of his resignation, Mr. Jesso was responsible for approximately 30% of all sales. Mr. Jesso quit his employment on July 14, 2006 and did not provide his employer with notice of his intention to resign.

Gagnon sought damages from Mr. Jesso, arguing that his failure to provide reasonable notice deprived Gagnon of the ability to plan for Mr. Jesso’s departure and caused significant loss to the company. Mr. Jesso took the position that he was not a managerial employee, did not owe Gagnon a fiduciary duty, and therefore had no common law obligation to provide notice of his resignation.

The Ontario Superior Court confirmed that an employee has a common law obligation to provide reasonable notice of his or her intention to terminate the employment relationship. The Court did not reference any terms of Mr. Jesso’s employment contract regarding notice of resignation. The Court held that the amount of notice required is a function of the employee’s role within the employer’s organization and the amount of time it would reasonably take the employer to adjust its operations and or replace the departing employee. The Court concluded that Mr. Jesso owed his former employer two months’ notice and accepted expert evidence that Gagnon’s revenue would have increased by 20% but for Mr. Jesso’s resignation. The Court concluded that Mr. Jesso was responsible for a loss of $17,582 a month after his departure and ordered Mr. Jesso to pay $35,164 to Gagnon as damages for his failure to provide reasonable notice.

While the issue is rarely litigated, this decision demonstrates that an employer may be entitled to damages where an employee has provided insufficient notice of his or her intention to resign. While the Ontario Superior Court found a reasonable notice period at common law, prudent employers may wish to ensure that their employment contracts contain a clause that requires reasonable notice of resignation.

Gagnon & Associates Inc. et. al v. Jesso et. al., 2016 ONSC 209

Questions relating to the content of this article may be directed to Lou Poskitt.