Employee Ordered To Work Out Notice Period
02, July 02, 2014 - Filed in: Court Cases
In negotiating senior executive employment agreements employers often seek lengthy notice periods from employees who wish to resign. The reasons for this usually revolve around the difficulty recruiting a replacement with specialized skills and the need to ensure a smooth transition without competition from the executive. Whether the employee fulfills this obligation, however, has often been considered more of a moral, than a legal, obligation on the basis that it was unlikely an employer could force an employee to continue to provide services against his or her wishes. A recent decision from the Ontario Superior Court of Justice challenges all that. In Blackberry Limited v. Marineau-Mes, 2014 ONSC 1790 (CanLII), Justice T. McEwen has issued a declaration that an executive is obliged to fulfill his contractual obligation to work out a six month notice period.
Blackberry offered Marineau-Mes a promotion from SVP to EVP in September 2013. A new employment contract accompanied the promotion that Marineau-Mes signed on October 16, 2013. The contract provided that six months' written notice was required of resignation, unless Blackberry waived the notice period in whole or in part. The difficulties Blackberry went through in the fall of 2013 are well known and Marineau-Mes began discussions with Apple in the same time frame he signed the contract with Blackberry. After accepting an offer from Apple, on December 23, 2013, Marineau-Mes gave Blackberry written notice of his resignation. He then indicated he intended to join Apple approximately two months later. Blackberry took the position this was insufficient. Marineau-Mes ceased to provide services to Blackberry on January 6, 2014.
To enforce Marineau-Mes' obligation, Blackberry applied for a declaration that the contract was binding and that Marineau-Mes was required to provide six months' written notice of resignation through June 23, 2014. Marineau-Mes took the position Blackberry's claim was confined to damages if he started his job with Apple prior to the expiry of the notice period. Damages, of course, would have been very difficult for Blackberry to prove as they aren't easily quantified. Marineau-Mes also asserted that the contractual resignation provision was contrary to the Employment Standards Act, 2000 (as it did not permit the continued accrual of vacation pay) and public policy (as it was effectively a non-competition covenant). The Court rejected Marineau-Mes' various arguments in their totality finding the contract and his obligations thereunder to be enforceable.
Decisions regarding employees' resignation obligations are a rarity. The resignation period often will expire before a court date can be secured. This case is a useful reminder that executives' obligations will be enforced, if employers can get to court in time to do so.
Note: This is a reprint of an article by Kristin Taylor of Cassels Brock.