For Employers

Key employees who quit – what are your rights as an employer?

It is a common myth in British Columbia that employees can quit on just two weeks’ notice to their employer.

Many will be surprised to learn that two weeks’ notice is by no means the law with respect to resignation, and that the failure to provide one’s employer with adequate notice can actually result in the employee being subject to a lawsuit. While such lawsuits are a rarity, there are certainly instances when such as lawsuit is warranted.

Employees, particularly those who could be considered key employees, will, subject to the terms of an employment contract, have notice obligations to their employer before resigning. If a key employee resigns without giving you adequate notice, you may be able to sue the employee to recoup losses that you incur as a result of that key employee’s departure.

Who is a key employee? There is no clear cut answer, and it is often uncertain whether a particular employee is a key employee or not. The Ontario case of Laplante v. Hennessy-Craibe, 2011 ONSC 5601 recently defined a key employee as follows:

A key employee is one who generally is responsible for guiding the business affairs of the employer, is involved in the decision-making process or is someone having access to confidential information that if disclosed could impair competitive advantage that the employer enjoys.

In another case, Imperial Sheet Metal Ltd. v. Landry, [2007] N.B.J. No. 226, the New Brunswick Court of Appeal described a key employee as follows:

A “key” employee is: (1) an integral and indispensable component of the management team that is responsible for guiding the business affairs of the employer; (2) necessarily involved in the decision-making process; and (3), therefore, has broad access to confidential information that if disclosed would significantly impair the competitive advantages that the former employer enjoyed. 

That being said, it is not only key employees who will have notice obligations.

How much notice must an employee give before leaving? There are several factors that are taken into consideration in answering this question.  The most important factor seems to be how long would it take to hire and train a suitable replacement. Other factors include the duties of the employee, the nature of the workplace, and the industry in question. Employees who hold crucial or difficult-to-fill positions will be required to give additional notice to their employer.

Where there is an employment contract dealing with the employee’s notice requirements before resigning, the amount of notice required will generally be determined by reference to that contract.

It should be noted that the notice requirements discussed here do not apply in cases involving a constructive dismissal. A constructive dismissal takes place when the employer unilaterally changes a term of the employee’s so that the employee’s employment is effectively terminated. Notice requirements also do not apply to employees who are involuntarily told that they must resign.

As an employer, you should also be aware that you will also have a duty to mitigate your damages. In other words, you must make a reasonable and diligent effort to locate a suitable replacement employee. You cannot idly let your losses mount and then sue the employee.

The law regarding the notice obligations of employees was recently reiterated in the Ontario Court of Appeal decision of GasTOPS Ltd. v. Forsyth. In that case, four key employees had left their employer on just two weeks’ notice. The employer sued the employees, and the Court held that two weeks was not adequate notice. In that case, the Court ruled that the employees should have given their employer ten months of notice of their resignation as that is approximately how long it would have taken the employer to hire and train replacements for the resigning employees.

If you are dealing with the aftermath of the resignation of a key employee, you may have options available to you to recoup your losses. To learn more about those options, please don’t hesitate to contact us today.

This blog is produced by Waterstone Law Group LLP. This blog is intended for information purposes only and is not offered as legal advice for a specific claim. Subscription to or use of this site does not establish a solicitor – client relationship between the user and Waterstone Law Group LLP or any of the individual contributors. For advice relating to your employment law claim, please contact us to arrange for a consultation.

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