“Reasonable Notice” Required Both Ways23-Apr-12
The Ontario Court of Appeal recently upheld a judgment awarding over $20 million in favour of an employer against four former employees who quit in unison on two weeks’ notice. Why the damages? They were key employees of a software engineering firm and left the company crippled when they departed at the same time. The court concluded that they breached their fiduciary duties through their actions after their departure and also failed to give reasonable notice of their resignation. The trial judge concluded that ten to twelve months’ notice would have been reasonable.
There was a very large judgment in a similar case involving an Alberta oilfield business several years ago.
This recent case is an important reminder that, at common law, employees owe their employer reasonable notice of termination of employment. Statutory notice (which in Alberta is one week after three months’ service and two weeks’ after two years of service) is usually sufficient but many times is not. If the employment contract sets the required notice, “reasonable notice” is not applicable. Be careful about specifying the required notice of resignation in an employment contract. It might reduce an employer's right to reasonable notice of resignation.