On July 25, 2014, the Supreme Court of Canada released its decision in Quebec (Commission des normes du travail) v. Asphalte Desjardins inc., on the issue of whether an employer who receives a notice of termination from an employee can terminate the contract of employment before the notice period expires without in turn having to give notice of termination or pay in lieu of such notice.
Facts of the case and lower court decisions
In 1994, Daniel Guay started working with Asphalte Desjardins, a pavement company. On February 15, 2008, Guay submitted a resignation letter to his employer announcing that he would leave his employment on March 7, 2008. Guay also indicated he was joining a direct competitor that was offering better pay. Guay provided three weeks’ notice to finalize certain files and prepare an overview of ongoing projects for his successor at Asphalte Desjardins. On February 18, 2008, the company unsuccessfully attempted to convince Guay to change his mind and stay with the company. The next day, it decided to immediately end his employment.
The Quebec Labour Standards Commission (Commission des Normes du Travail) sought three weeks’ of pay in lieu of notice on behalf of Guay pursuant to the Act Respecting Labour Standards (Act) and the resignation letter. It also claimed the monetary value of his annual leave (vacation). The first judge granted the action in favour of the employee. However, Asphalte Desjardins appealed the decision before the Court of Appeal.
Back in April 2013, the Quebec Court of Appeal (2013 QCCA 484) decided the employer acted within its rights by waiving the resignation notice given by its employee pursuant to section 2091 of the Civil Code of Quebec (CCQ). According to the Court, the effect of the employer’s decision to waive such notice is the immediate ending of the employment relationship without any requirement to pay to the resigning employee a termination notice or the salary to which he or she would have been entitled for the remainder of the notice period.
Justice Marie-France Bich decided such a waiver does not correspond to a termination of the employment relationship by the employer as contemplated by sections 82 and 83 of the Act. The employer therefore does not have to compensate the resigning employee.
One of the three judges, Pelletier, did not agree with the approach, arguing that an unscrupulous employer might simply reject an employee’s notice of resignation to avoid the obligation to pay any compensation to the employee.
Supreme Court of Canada decision
On July 25, 2014, the Supreme Court reversed the judgment of the Court of Appeal of Quebec, making it clear that when an employee resigns and gives working notice in accordance with article 2091 of the CCQ, the employment contract is not terminated. Section 82 of the Act provides that a contract of employment for an indeterminate term is not terminated at the time notice is given. The contractual relationship in its entirety continues to exist until the date specified in the notice given by the employee or the employer.
As a result, when Asphalte Desjardins terminated the employee during the notice period, it unilaterally terminated the employment contract without giving sufficient notice of termination, thereby defaulting on its obligation under article 2091 and triggering ss. 82 and 83 of the Act.
As stated by Supreme Court Justice Wagner, J.:
“This means that even after one of the parties to a contract of employment for an indeterminate term gives the other party notice of termination, both parties must continue to perform their obligations under the contract until the notice period expires. This includes the obligation to give notice of termination set out in art. 2091 CCQ, which the other party must meet if he or she wishes in turn to terminate the contract before the notice given by the first expires.”
As a result, the Commission des Normes du Travail can claim on Mr. Guay’s behalf compensation in lieu of notice of termination equivalent to three weeks’ salary, together with the amount due in respect of his vacation, in accordance with the total amount determined by the trial judge.
The gist of the Supreme Court’s decision is that notice of resignation is a protection offered to the employer, and, lacking just cause, the employer may not waive the protection without compensating the employee. The dissenting Justice Pelletier of the Quebec Appeal Court is right: granting employers the right to waive notice of resignation leads to inequitable situations where employees risk losing their salary for the duration of the notice period merely because they wished to fulfil their duty to give reasonable notice of resignation to their employer.