Canada: Reasonable Notice Before Terminating An Employment Contract : It's A Two Way Street

In a recent decision, the Superior Court of Quebec (the Hon. Danye Daigle) ordered an employee to pay an amount of $12,000 in damages as compensation for the failure to provide reasonable notice before terminating the employment contract (Phamarcie Jean-Sébastien Blais inc. c. Pharmacie Éric Bergeron et André Vincent inc.). 

The context

The employee, Jacques Lacombe, was a laboratory technician for the plaintiff,  operates a pharmacy in Shawinigan. Lacombe started working part-time for the pharmacy, which was owned by his father, in 1970 and began full time for the business in 1991. Although his father's business was sold, he continued his employment with the pharmacy. He knew the business and was well liked by the clients, with whom he had made a strong connection. It is worth noting that he benefited from good working conditions.

As time passed, Lacombe found himself in a disagreement with some of the decisions taken by his employer. Differences were at their worst in August 2012 when he was no longer allowed by the pharmacy to take care of pill dispensers because he had refused to follow training.

In this context, Lacombe decided to offer his services to a competitor. An agreement was drawn up and Lacombe resigned from his position with Phamarcie Jean-Sébastien Blais on the same day, without informing them of the identity of his new employer.

What followed was a massive exodus of clients who decided to follow Lacombe. Nearly 280 clients transferred their files to the new pharmacy, hence the recourse taken by his former employer.

The Superior Court Decision

Justice Daigle starts by recalling that the obligation to provide a notice of termination to the other party in an indeterminate term employment contract applies as much to the employer who dismisses an employee as to the employee who resigns. In the latter situation, the notice of termination is intended to provide the employer with sufficient time to replace the employee who has resigned or, at the very least, to adapt to his or her departure.

Turning to the question as to whether or not the notice of termination is reasonable, Justice Daigle reviews the relevant considerations. An important factor in establishing whether or not reasonable notice was given is the employee's importance in the business determined by his salary, position, and length of service. She notes that other elements may be considered such as whether the performance of the work is related to the person of the employee, whether he or she resigned in good or bad faith, and possible breaches of his or her duty to act with loyalty.

In the case at hand, Justice Daigle concludes that Lacombe was without doubt a key employee of the business due to his notoriety in the area. His decision to resign abruptly showed a lack of consideration. Also, he avoided his former employer who was trying to obtain explanations and lied when he did agree to speak to them – showing that he acted in bad faith.

In this context, the judge finds that the precipitated departure of Lacombe had a serious impact on the plaintiff, hindering their recovery from his absence. Furthermore, she finds it irrelevant that the pharmacy may have been unable to prevent an exodus of clients even if Lacombe had given proper notice. Therefore, the employee is condemned to pay the equivalent of two months' salary in compensation for the notice of termination he should have given his former employer.

However, the Court dismisses the other allegations of Pharmacie Jean-Sébastien Blais inc. and finds that Lacombe did not breach his duty of loyalty, as the evidence does not establish that he used confidential information belonging to his former employer or that he had resorted to other unfair practices. Rather, the evidence reveals that the patients who transferred their files and followed Lacombe did so voluntarily.

Take-away

It is rare to see an employer take action against a former employee who resigns without giving proper notice. This ruling reminds us that the obligation to provide reasonable notice before terminating an employment contract applies not only to the employer but also to the employee, and that this obligation is more than a gesture of courtesy or professionalism.  

Justice Daigle's judgment also shows that such recourses are not limited to employees who were managers or key executives.

However, as Justice Daigle points out, it must be said that while pursuing legal action against a former employee who resigns without notice is an option, it is always more prudent to provide for these situations in the employment contract, whether it is by a non-competition clause or a clause providing for a specific notice to be given by either party prior to termination.

Finally, it is worthy to note that the Ontario Superior Court of Justice, in a similar case where a high performing salesperson resigned overnight without giving proper notice, ruled against the employee in this matter (Gagnon & Associates Inc. v. Jesso).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.