When Reneging on a Resignation Pays Off
In an epic second-season episode of Seinfeld, George Costanza quits his job in a fit of rage after being disallowed use of the executive toilet. He immediately regrets it, and sheepishly returns to the office as if nothing happened when it becomes clear that he has no alternative. His boss, understandably, is less than thrilled.
Recently, in English v. Manulife Financial Corporation, 2019 ONCA 612, Ontario’s highest court confronted a similar (albeit less entertaining) fact scenario and revisited the question of what constitutes a “clear and unequivocal” resignation foreclosing an employee’s entitlements to severance.
When Manulife announced the implementation of a new computer system, employee Elisabeth English — then in her 60s — gave her supervisor a letter advising that she would be retiring. She had no interest in learning the new technology that late in her career. However, Manulife reversed its plan, and when it announced that it would not be upgrading its systems, Elisabeth wanted to stay, but Manulife took the position that she had already resigned.
Elisabeth brought a wrongful dismissal lawsuit against Manulife.
On summary judgment, the motion judge framed the issue as follows:
“whether an employee who has resigned her position of employment by way of a notice of retirement may later rescind her written notice of retirement.”
The motion judge concluded that Elisabeth’s letter constituted a “clear and unequivocal” resignation, and that her resignation was accepted by Manulife. Accordingly, Elisabeth had not been wrongfully dismissed.
Nevertheless, the motion judge went on to find that if she had been wrongfully dismissed, she would have been entitled to a notice period of 12 months.
DECISION ON APPEAL
The Court of Appeal held that the motion judge erred in finding a “clear and unequivocal” resignation, ruling that Elisabeth’s resignation notice was equivocal given the circumstances in which she presented it to Manulife, and that she was entitled to withdraw it.
Elisabeth told her supervisor that she was not entirely sure she wanted to retire, and in turn, he assured her that she could change her mind. The day after Manulife announced the cancellation of the computer conversion, Elisabeth advised that she had changed her mind, and her supervisor did not indicate that there was a problem with this.
The Court found that these facts did not support a finding of a “clear and unequivocal” resignation. On the contrary, they demonstrated that Elisabeth was equivocal when giving her resignation notice, and that her equivocation was condoned by Manulife.
Accordingly, since Elisabeth did not in fact resign, the Court held that her termination was wrongful and awarded her 12-months’ salary in lieu of notice (as per the determination of the motion judge).
This decision is an important reminder that courts will carefully consider whether an employee fully intended to resign from their position and the assessment of whether a resignation was “clear and unequivocal” is fact-specific, taking into account all of the circumstances surrounding the resignation, including the employer’s response. It also indicates that in some circumstances, an employee really can quit and take it back later.
As the Court of Appeal and Seinfeld show us, caution is recommended before taking steps to flush your job (and severance rights) down the toilet.
To review the complete decision, click HERE.