February 11, 2015

“Give Me a Raise or I’ll Quit”: Has the Employee Resigned?

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It can be surprisingly difficult for an employer to rely on statements such as “I quit” to establish that an employee resigned, particularly if the employee later indicates that they want to return to work. Courts require proof of a clear intention to resign in order to find that an employee terminated their employment. While the statement “I quit” may seem clear, courts will inquire into the circumstances in which the statement was made in order to determine whether the employee actually resigned.

A recent decision from the Nova Scotia Court of Appeal provides useful guidance on the law of employee resignations. In Kerr v Valley Volkswagen, 2015 NSCA 7, Kerr worked as a parts manager for Valley Volkswagen. Kerr gave the employer an ultimatum to either raise his salary by $100 per week or else he would quit. The employer waited three weeks to see if Kerr would change his mind, and when he did not they accepted his resignation. Kerr then brought a wrongful dismissal action alleging that Valley Volkswagon had terminated his employment.

The Court confirmed that the determination of whether an employee has resigned requires a careful examination of the context, having regard to all of the circumstances. The resignation must be voluntary and the employee’s words or conduct evidencing a resignation must be clear and unequivocal. The court must be satisfied that there was an objective intention to resign.

The Court upheld the trial judge’s decision that Kerr’s threat to resign was made in clear and unambiguous terms. A reasonable person would have understood that the statement was to be taken seriously and was a true statement of intent.

The Court of Appeal also rejected Kerr’s argument that even if the ultimatum constituted a resignation, he was entitled to resile from it unless the employer had acted on it to its detriment. The Court held that this position was contrary to the basic principles of contract law, which hold that an enforceable contract is created when a party communicates their acceptance of a valid offer. The employer is not required to act on a resignation to their detriment. Instead, once the resignation is accepted, the contractual bargain (to terminate the employment relationship) is struck.

The Court of Appeal held that Kerr was not entitled to resile from his resignation after it had been accepted. If, however, Kerr had retracted his offer to resign in the three weeks between when he made the offer and when the employer accepted it, he would not necessarily have been bound by the resignation and the employer would have had to show detrimental reliance in order to enforce it.

This case affirms the importance of context in determining whether an employer can rely on an apparent resignation. It also confirms that if an employer accepts an objectively clear and unequivocal resignation, there is a high likelihood that the employee will not be permitted to subsequently retract their offer.

For a printable PDF version of this article, please click the link below:
"Give Me a Raise or I’ll Quit": Has the Employee Resigned?

For more information, please contact Alison Bird at coxandpalmer.com.

Cox & Palmer publications are intended to provide information of a general nature only and not legal advice. The information presented is current to the date of publication and may be subject to change following the publication date.