A resignation must be clear and unequivocal to end employment. Sometimes employees change their mind and try to rescind a resignation. When this happens and the employee continues working for the employer on the same terms and conditions without any interruption, the decision in Theberge-Lindsay v. 3395022 Canada Inc. (Kutcher Dentistry Professional Corporation) says the employee may be deemed to have lost all prior service with the employer.
The employee started working as a hygienist in the employer's dental office in Stoney Creek, Ontario in 1993. At the time of hire, she did not sign an employment agreement. However, due to a number of company restructurings, the employee was eventually required to sign several employment agreements, beginning in 1999, in order to remain employed by the Company. All of the employment agreements limited her termination entitlements to the minimum standards under the Ontario Employment Standards Act, 2000 ("ESA").
On March 28, 2005, the employee tendered her resignation effective July 7, 2005. Prior to the effective date of resignation, the employee told the employer that she wished to continue working at the dental office. The employer was happy to have her continue working and they signed a new employment agreement on June 30, 2005. Between the date she resigned and June 30, 2005, the employee worked continuously without any interruption. There were no changes to the terms of her employment in the new employment agreement. Like her prior agreements, the new agreement limited her rights upon termination to the minimum standards under the ESA.
In 2011, the employee signed another employment agreement, which also limited her termination entitlement to the minimum standards under the ESA. In December 2012, the employee was dismissed without cause. She was provided with one week of pay pursuant to the Ontario Employment Standards Act, 2000. She sued.
What did the Court Say
The trial judge said the resignation in 2005 did not result in a break in her service. This was because the employer allowed her to rescind her resignation and perform the same responsibilities without any interruption. A letter of support that the employer wrote to help the employee get financing was also relevant because it showed that the employer viewed the employee's employment as having been continuous since 1993. The judge said none of the employment agreements were enforceable so he awarded her 15 months' notice for her 19 years of service.
The employer appealed. The appeal court said the unequivocal resignation in 2005 resulted in a break in the employee's service. In order to be rehired she had to sign a new employment agreement. The court also said that the new employment agreement was legally binding. As such, the court of appeal calculated the employee's service from 2005 (not 1993), and awarded her 7.5 weeks' notice in accordance with the minimum standards under the ESA.
Lessons for Employers
It remains to be seen whether this decision will be appealed. However, as it stands, this decision shows that an unequivocal resignation that is rescinded can result in a break in service. To avoid any disputes, it is prudent for an employer faced with this situation to seek legal advice. At a minimum, the employer should require that the employee sign a new employment agreement that specifically states that the employer will not recognize any service before the resignation when calculating length of service and termination entitlements unless required by employment standards legislation and then only to that minimum extent.