Wrongful resignation prompts $35K pay-out

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A recent decision from the Superior Court of Ontario is stressing once again that employers aren’t the only ones who have an obligation to give reasonable notice – employees do too.

The case

HVAC manufacturer representative Gagnon & Associates brought a claim of wrongful resignation after two disgruntled employees – Patrice Comeau and Barry Jesso – handed in their notice on the same day.

Comeau and 10-year-veteran Jesso were jointly responsible for 60 per cent of the company’s sales and Jesso didn’t feel he was being paid fairly.

As the company chose to maintain the status quo, the pair approached an industry competitor and suggested establishing a new office in the same region Gagnon & Associates was currently operating.

The competing company took up their offer and both men gave their former employer resignation letters, effective the same day.

More experienced Jesso offered to work two additional weeks to complete his existing duties, upon the condition that the company accepted his calculation of commission owed to him.

Gagnon & Associates refused and Jesso never returned to work.

Unsurprisingly, the company struggled to find suitable salespeople to replace the duo and sales were negatively impacted.

In court, Gagnon & Associates insisted that Jesso’s departure in particular had resulted in significant loss of sales for which it claimed it should be compensated.

The company alleged that, in the three year period following their departure, it had made between $2.782 million and $3.14 million less than it would have had they stayed.

The decision

While the court found that Jesso had failed to give reasonable notice, it did not accept the company’s excessive calculation of lost revenue – eventually, it was decided that his liability only amounted to $35,164.

While the company should have been able to look forward to the windfall, Jesso actually countersued – successfully.

He sought the commissions owing to him which the company had previously denied and the court found these values $38,501 – the amounts were then set off against each other, to the employer’s loss.

Leading employment lawyer Khalfan Khalfan said that while the employer couldn’t claim a financial victory, the case still strengthened the fact that employees are obligated to provide reasonable notice.

“It is a well-established common law principle that an employee is obliged to give reasonable notice of resignation from employment,” he said, adding that the definition of “reasonable notice” will change in each case.

“The notice required of an employee will be a function of that employee's position, length of service with the employer and the time it would reasonably take the employer to replace the employee or otherwise take steps to adjust to the loss,” he explained.

“When an employee, especially a key employee, offers his or her resignation, absent a contractual agreement, an employer need not accept a short resignation notice period, especially if it will leave the employer in a vulnerable position,” he advised.

“For employers, it is always wise to include a term in an employee's employment agreement that stipulates the notice period an employee must give in regard to his or her resignation.”

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