If an employee resigns from their employment, they voluntarily leave their position. In contrast, if an employee is terminated without cause by their employer, the employer is the party who ends the employment relationship. 

This article looks at the difference between employee resignation and employer termination, along with the consequences of each. 

Resignation, termination or constructive dismissal?

Provided there is no provision stating otherwise in the employment contract, both the employer and the employee are allowed to choose to end the employment relationship. If an employee does so voluntarily, they are said to have resigned. 

When an employer brings the relationship to an end, this is commonly called termination. If the contract is of indeterminate length (that is, not for a fixed term), the employee is often given reasonable notice before being terminated. 

Finally, if an employee decides to leave their position after their employer unilaterally changed an essential term of their contract or demonstrated an intention to no longer be bound by the contract, this might not be a voluntary resignation, but instead a constructive dismissal.

If an employee resigns, they are not entitled to receive termination pay

If an employee resigns, they are not entitled to termination entitlements, such as the provision by the employer of either reasonable notice of termination or compensation in lieu of such notice. They are also not entitled to bring an action for wrongful dismissal to enforce these rights.

On the other hand, if an employee is terminated without cause, they are normally entitled to reasonable notice or otherwise provided with compensation in lieu to provide them with the means to locate alternate employment. As we have written about before, this may be a statutory minimum period or a longer common law period, depending on the circumstances. Employees might also be entitled to additional compensation, such as severance pay. 

Employees who have been constructively dismissed are also able to claim termination entitlements.

Resignation must be clear and unequivocal, objectively reflecting an intention to resign

Due to the significant difference in effect between resignation and termination, courts have required resignations to be clear and unequivocal, objectively reflecting an intention to resign. However, a resignation does not need to be in writing. Courts consider all the surrounding circumstances to determine whether a reasonable person would have understood the words or actions of the employee to indicate that they had resigned. 

Courts have also held that an employee may be found to have resigned if they repudiate their employment agreement. This may happen if the employee refuses to perform an essential part of their duties, allowing the employer to accept the repudiation and treat the employment relationship as at an end. 

Finally, if an employee gives the employee an ultimatum only to accept work if their conditions are met, the court may view this as a resignation if the conditions were not part of the terms of their employment. 

Employee argued they had been wrongfully dismissed

These principles were examined in the recent decision of the Ontario Superior Court of Justice in Scull v Ensemble Travel Ltd.

The plaintiff employee started working for an organization of travel agencies in 2009. In June 2019, her employment unraveled and she brought an action for wrongful dismissal, claiming that she had been terminated. 

The employee said that, after requesting help with a travel program during a telephone call with senior management, in which no one responded to her pleas, she was upset and asked her manager for a half day of sick leave. She accused her manager of having “thrown her under the bus” and said that “actions like these made her want to resign.”

The next day, she met with a human resources representative and denied having resigned. After taking some sick leave, she returned to work but received a text saying that it was her last day in her employment and her benefits would be stopped.

Employer claimed that the employee had resigned after an argument and confirmed her resignation

The employee’s manager and human resources representative gave a different story. The employee’s manager claimed that the employee did not want to work as part of a team and disapproved of the direction that the travel program was taking. After the call, the manager told her that she would no longer be responsible for it. According to the manager, the employee said either “I’m resigning” or “I will be resigning.”

The human resources representative said that the day after the incident, the employee confirmed that she had resigned, saying she had been considering doing so for a long time. The representative encouraged her to consider it for a couple of days in case she changed her mind. She later phoned the employee, who told her that she would rescind her resignation if she did not need to report to her manager, or she would leave and be owed a severance.

When the representative said that they could not change the reporting relationship, the employer accepted her resignation. 

Court found that the plaintiff had resigned

Justice Brown preferred the employer’s evidence, deciding that a reasonable person would have understood the employee to have resigned based on her statements and conduct. Her Honour found that the employee resigned after the incident and confirmed this the next day. 

As a result, the Court dismissed the employee’s claim, noting that the employer had already paid all owed wages and accrued vacation pay.

Finally, Justice Brown said that:

“it can also be found that the plaintiff resigned as a result of the ultimatum which she gave to the defendant … That is to say that she would rescind her resignation and come back to work, but only on the condition that her reporting relationship be changed, which was not a part of her initial terms of employment, or she would leave but demand a severance package.”

Contact Grosman Gale Fletcher Hopkins LLP in Toronto for Advice on Employee Resignation and Termination

The employment lawyers at Grosman Gale Fletcher Hopkins LLP assist both employers and employees with legal issues relating to ending employment relationships. If you are dealing with an employee that may have resigned, or an employer that has not paid out termination entitlements, contact us online or at 416.364.9599 to schedule a consultation.