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“Give Me A Raise, or I Quit”. Is that a Quit if the Employer Declines the Raise?

If an employee says “I quit” and storms out of the workplace, have they quit?  Maybe. Maybe not.  And whether the employee has quit makes a big difference, because if an employee quits, then they end the contract and the employer does not have to provide notice of termination.  However, if the employee has not quit, and the employer acts as if a quit did occur, then the employer can be ordered to pay damages to the employee.  These ‘quit’ cases often make for entertaining reading, but they are not much fun for employers and employees, since there can be so much uncertainty.

Take a recent decision from Nova Scotia called Kerr v. Valley Volkswagen.

Key Facts

The employee (EE) worked for a Volkswagen dealership for 7 years, never receiving a raise the entire quittime.  The judge found that the EE went to a manager’s office one day and said: “I want a $100 per week raise or I’m gone.”  He stated that he had another job opportunity available to him that paid him more money, and that he intended to quit if he did not receive a $100 per week raise.   The employee continued to work for the next three weeks, but the employer then informed the EE that it had accepted his offer to resign, since it would not be giving him a raise.

The employee sued for wrongful dismissal, arguing that he had not quit and therefore had been terminated without notice.

Issue:    Did the EE offer to resign, and did the employer subsequently accept that offer, thereby bring the contract to an end?

Court’s Decision:

The Court began its reasons by referencing several well known Supreme Court of Canada decisions in which the court had emphasized that employment contracts are defined by a power imbalance, and that employers have a duty of fair dealing at the point of termination of the contract (McKinley v. BC Tel, Wallace v. UGG, and Honda v. Keays), since employees are particularly vulnerable.

The Court then turns to the law on resignation.  That law is easy enough to state, and the Court cites the Ontario decision in  Kieran v Ingram Micro Inc., [2004] OJ No. 3118 (ONCA) for the principle:

A resignation must be clear and unequivocal. To be clear and unequivocal, the resignation must objectively reflect an intention to resign, or conduct evidencing such an intention

A more detailed and useful summary of the case law follows:

Case law suggests that where an employee expresses dissatisfaction with an employer or about a wrong committed by the employer (real or perceived), and declares an intention to seek other employment without words or actions indicative of an immediate firm intention to quit, he or she has not quit.  (See:  Mosher v Twin City Dairy (1984), 63 NSR (2d) 252 (NSSC); Widmeyer v Municipal Ent. Ltdreflex, (1991), 103 NSR (2d) 336 (NSSC);Tolman v Gearmatic, [1986] BCJ No. 481 (BCCA); Danroth v Farrow Holdings Ltd., 2005 BCCA 593 (CanLII), 2005 BCCA 593, Assouline v Ogivar Inc., [1991] BCJ No. 3419 (BCSC); Turner v Westburne Electrical Inc.2004 ABQB 605 (CanLII), 2004 ABQB 605; Carmichael v Mantis Racing Inc., [2009] OJ No. 5676 (OSCJ), and Ruparell)

[38]               Case law suggests that where the employee, in a state of depression, frustration or emotional angst makes a hasty (usually) statement that he or she quits and shortly thereafter, realizing the rashness of his or her statement or actions, either retracts the statement in short order or engages in discussions with the employer to patch up the dispute leading to the declaration of intent to quit, the employee has not quit.  (See:  Cranston v Canadian Broadcasting Corp. (CBC), [1994] OJ No. 605 (OSCJ); Maguire v Sutton, [1998] BCJ No. 138 BCSC); Movileanu v Valcom Manufacturing Group Inc., [2007] OJ No. 4414 (OSCJ); TurnerCarmichaelRobinson and Burns)

[39]               On the other hand, when the words or actions of the employee demonstrate a clear intent to resign, either unconditionally, or as part of an ultimatum, the courts have not hesitated to find that the employee quit.  (See:  Bevis v Renaissance Wine Merchants Ltd.2006 ABQB 8 (CanLII), 2006 ABQB 8 (upheld on appeal: Bevis v Renaissance Wine Merchants Ltd., 2007 ABCA 356 (CanLII), 2007 ABCA 356); Eichenberger v Heath Consultants Ltd., [1997] BCJ No. 2682 (BCSC); LarsenAnderson; and Billows v Canare Forest Products Ltd., 2003 BCSC 1352 (CanLII), 2003 BCSC 1352)

Applying this law to the facts, the Court rules that the EE gave the employer an ultimatum, that either he receives a raise or he quits.  No raise was given, and the employer accepted the resignation.  According to the Court:   “[The EE's] threat to resign was made in clear and unambiguous terms.  In all the circumstances of this case, a reasonable person would have understood that [the EE] was serious in his intention to resign and take up another job opportunity that would pay more, if he was not given the demanded raise.”  The employer was within its rights to accept the resignation, and it did so.  The EE had three weeks to rescind his resignation, but he did not.  Therefore, the wrongful dismissal was dismissed since the employee resigned.

Issues for Discussion

Courts have often found that an employee’s statement that they are quitting does not amount to a quit.  Do you agree with the court’s approach, which recognizes that an employee may make comments in a moment of frustration that they do not mean?

If an employer treats an employee’s expression that they are quitting as a quit, but later a court rules that there was no clear intention to quit, the employer will be ordered to pay damages for wrongful dismissal.  Therefore, what advise would you give an employer confronted with an employee who threatens to quit?

The court here says that the EE could have rescinded his ultimatum at any time during the three weeks between the date he made it and the date the employer accepted the quit.  If the employee had done that, do you think that the employer could have nevertheless treated the threat as grounds for dismissal with cause (without notice)?

 

 

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3 Responses to “Give Me A Raise, or I Quit”. Is that a Quit if the Employer Declines the Raise?

  1. Drew Reply

    March 5, 2014 at 6:42 pm

    I do agree with the approach that a statement of quitting does not always amount to a quit. Often times employees are put in very stressful, frustrating, and compromising situations by their employers. Sometimes using the threat of quitting is the only leverage an employee has when employers can do such things as changing job descriptions, reducing hours, demanding increased productivity, coercing employees to work overtime without pay (salaried employees, managers, and employees low on the ladder and desperate for an income), etc. Especially for employees without unions or easy access to a union, this can be the immediate only power they hold.

    I think employers should weigh the severity of threats in their mind. For example, if a single mother threatens to quit her job, that is a significant sign that the employer is doing something unfair as the single mother most likely needs that job but would rather be temporarily unemployed than continue under the employer’s current conditions. However, if the complaint comes from someone who works one day a week and does not financially rely on the job, then perhaps there is less cause for concern in that situation.

    While I understand the above case is about wrongful termination, I feel the true issue is: did the employee deserve a raise or not? After seven years and no raise I say they most definitely did and the employer was being exploitative of this staff member. Additionally, since the employer took three weeks to induce termination, it appears as though they may have been using that time to find someone else to replace the current employee – a covert arrangement that benefited the employer.

  2. Dario Reply

    April 1, 2014 at 6:02 am

    I do not agree with the Court’s approach in this case. The employee did not show an “immediate firm intention to quit” because he continued coming to work for three weeks, without any apparent confirmation of the intent. In fact, the employee showed the intention to continue working by coming to work.

    In my opionion, this was clearly a case of rash and emotional response for an employee perceiving a wrong in not receiving a salary incraese over such a long period of time. If every such utterance by an employee across the land were considered a formal resignation, it would create conditions for many employers to circumvent common law practice of giving notice by exploiting a misspoken or rash statement. In fact, an employer could try to frustrate the employee(by various management practices) to the point of anger in order to have the employee utter these words, thereby forgoing their obligations under the law. As noted above, the inherent power imbalance requires employers to have a duty of fair dealing, and interpretations like this remove the duty of fair dealing.

  3. Lance Ceaser Reply

    April 15, 2014 at 8:42 pm

    I think that there are a number of points on which the Court’s analysis in Kerr is questionable:

    * The Court cited precedent that an employee’s stated intent to resign must be “clear and unequivocal”, but here the employee was effectively expressing dissatisfaction with his terms and conditions of employment and mentioned the potential of quitting to take up employment elsewhere. He did not set a deadline for receiving a wage increase, so his resignation is at best somewhat equivocal.

    * The Court also cited caselaw for the principle that the employee’s words or actions must demonstrate an immediate, firm intention to quit. The Plaintiff continued to attend work for 3 weeks without repeating the threat or setting a deadline for getting a raise. I see nothing firm or immediate about his intention to resign.

    * As in Robinson v Team Cooperheat-MQS Canada, 2008 ABQB 409, cited in Kerr, there was “no agreement that the contract would end on a stipulated date”. At the same time, the employer made no attempt to clarify the Plaintiff’s intentions during the 3 weeks leading up to its “acceptance of his resignation” (i.e., no one asked him what his last day of work would be if he did not receive a raise). In the absence of that sort of certainty, it’s hard to see how the employer’s acceptance of his resignation was not, in fact, a termination of the employment relationship.

    However, I think that the outcome in this case can be (at least partly)explained by the trial strategy of Plaintiff’s counsel. Choosing to not cross-examine the two witnesses who might have corroborated his ‘carefully chosen words’ gave the Court the impression that he had given a much firmer resignation than he was asserting. This impression likely did not help the Plaintiff’s credibility or reflect well on the merits of his position. Not to say that the character of the Plaintiff, rather than the law, should decide a case, but I think it goes some way to explaining how he was found to have resigned.

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