Canada: The Court Of Appeal Decides That An Employer May Waive A Notice Of Resignation Given By An Employee Without Paying An Indemnity

The Court of Appeal recently rendered a decision that has major implications in that it reverses the dominant Case law position in Quebec with respect to notices of resignation. In a two to one decision, the Court of Appeal states that an employer may waive the notice of resignation that an employee must provide pursuant to Article 2091 of the Civil Code of Quebec(C.C.Q.). In considering the consequences attached to such a waiver, Justice Marie-France Bich decides that it does not correspond to a termination of the employment relationship by the employer as contemplated by Section 82 of An Act Respecting Labour Standards(the Act). The employer therefore does not have to indemnify the employee. 

Facts

In 1994, the employee, Daniel Guay, started working with the defendant Asphalte Desjardins Inc., a pavement company. On February 15, 2008, Mr. Guay submitted a resignation letter to his employer announcing that he would leave his employment on March 7, 2008. Mr. Guay also indicated that he was joining a direct competitor that was offering better pay. Mr. Guay provide a three (3) weeks' notice so as to allow him to finalize certain files and to prepare an overview of ongoing projects in order to help his successor. On February 18, 2008, the employer unsuccessfully attempted to convince Mr. Guay to change his mind and stay with the company. On February 19, 2008, the employer decided to immediately end the employment of Mr. Guay.

The Labour Standard Commission sought the payment of three weeks' of pay on behalf of the employee pursuant to Section 82 of the Act. The first judge granted the action. The employer appealed the decision before the Court of Appeal.

Decision

In a very detailed analysis, Justice Bich clarifies the obligations created by Article 2091 C.C.Q. She explains that the notice is for the benefit of the receiving party. The purpose of the notice is to address the inconveniences resulting from the unilateral resiliation of an employment contract that are suffered by the receiving party. While the notice may also, in practice, benefit the giving party, which thereby gains a transition period, such practical advantage does not amount to a right. The employer, in these circumstances, is thus free to forego the benefits resulting from the notice of resignation.

An employer exercising such a waiver does not have to compensate the resigning employee. Indeed, the employer waiving the right to the notice does not thereby terminate the resigning employee. Resignation is a termination of employment provoked by the employee; while the notice may postpone its effect further in time, it does not have the effect of modifying the legal nature of the resignation.

Justice Bich further states that no distinction should be made between the case of an employee announcing a departure date and that of an employee offering to stay during a transition.

It should be stressed, however, that Justice Bich tempers her reasoning in obiter. She states that her proposed interpretation rests on a contractual approach that may seem difficult to reconcile with the general principles of employment law, which recognize the inherent inequalities between employers and employees and tend to protect the latter. Consequently, Justice Bich calls on the legislator to intervene.

Justice Bich also states that, under certain circumstances, the exercise of the employer's right to waive the notice of resignation could be considered abusive pursuant to the C.C.Q. By way of example, she refers to the case of an employee that announces his retirement a year in advance or to the case of an employee who provides notice in order to go take care of a sick person.

The scope of the above remarks being quite wide, it is to be expected that they may be used by lower courts seeking to avoid the strict application of this decision. An employer should therefore act in a reasonable and conscientious manner when it foregoes a notice of resignation without compensation.

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