Cessation of an employee’s employment can happen by way of termination of employment by the employer or resignation by the employee. In the case of a voluntary resignation, while the employer may feel as though it is losing a beneficial employee, the upside is that the employer is not liable for the dreadful “reasonable notice of termination”. This blog discusses some of the best practices for employers when handling a resignation.

1. Confirm the resignation in writing

If an employee provides verbal notice of resignation or does not make it explicitly clear that they are resigning, ask them to confirm in writing:

  • that they are resigning; and
  • their last day of work.

It is important to confirm that the employee (as opposed to the employer) is the one ending the employment relationship because an employer is not liable for “reasonable notice of termination” if the employee voluntarily resigns. Having a proper paper trail clearly showing that the employee voluntarily resigned can help to avoid costly litigation down the road.

2. Check the employment agreement for waiver of notice of resignation

Similar to how employers must give notice of termination, employees have an obligation to give notice of resignation. After notice is given in either of these scenarios, the employer may lose faith that the employee is performing their duties to the best of their abilities. This can be particularly troubling where an employee gives a lengthy notice of resignation. However, a well-drafted employment agreement can:

  • set out the length of notice that an employee must give – two weeks to one month is standard, but can be greater if it is a key employee. This protects the employer by (a) ensuring employees do not resign without any notice and (b) avoiding the risk of employees giving an excessively long notice; and
  • give an employer the right to waive an employee’s notice of resignation.

While the case law is not entirely settled in Ontario, it seems that employers cannot “waive” or “renounce” employees’ notices of termination without a written contract providing such a right.  That said, a notice period chosen by an employee cannot be imposed on an employer. Once an employee provides notice of resignation, the employer can choose to:

  • accept the terms of the notice and allow the employee to complete their remaining term;
  • pay the employee wages in lieu of working out the notice period (or waive the notice period if the employer contracted for such a right); or
  • reject the employee’s notice of resignation, terminate their employment and provide reasonable notice of termination. This can be effective if the notice of resignation provided by the employee is greater than what their reasonable notice of termination would have been had the employer terminated their employment. [1]

3. Remind the employee of post-employment obligations

Regardless of how an employment relationship ends, the employer should remind the employee (in writing) of their post-employment duties and obligations. This can include duties and obligations relating to:

  • confidentiality;
  • non-solicitation;
  • non-competition; and
  • ownership over intellectual property.

4. Manage customers, clients, employees and continuing business process

After receiving notice, an employer should communicate the employee’s resignation to its employees. Depending on the relationship between the employer and the employee, the communication can involve the employee’s input.

If the employee is customer facing (e.g. a salesperson), the employer needs to decide how it will transfer such customers to other employees to ensure continuity of service (e.g. having the departing employee make introductions to the employee who will be taking over their files). If the employee plays a key role in the organization, the employer should consider how it will ensure continuity of business processes while searching for a replacement employee (e.g. documenting responsibilities and creating procedure manuals that can be given to a replacement employee – this can even be done prior to receiving notice of resignation).

5. Summary

Just like any other business process, the employer should have a plan in place to handle resignations.This could involve compiling a checklist for its human resources department or training its members on the best practices noted above. While the best approach may vary in different organizations, after receiving notice of resignation, the employer needs to consider how it will ensure protection of its interests and continuity of its business processes at a high quality level.