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September 2018

What Happens When You Tell Your Boss You Want to Retire... and then Change Your Mind?

David Elmaleh
David Elmaleh
Partner

Gabriela Caracas
Gabriela Caracas,
Associate

By David Elmaleh and Gabriela Caracas

In English v Manulife Corporation, 2018 ONSC 5135, the Ontario Superior Court of Justice considered the legal question of whether an employee who has resigned by way of a notice of retirement may later rescind her written notice of retirement.

The case is significant to a large portion of the population. The decision to retire often takes a lot of family and financial planning, with uncertainty as to the “right” time. The choice of when to retire also impacts employers, who regularly grapple with succession planning, filling or consolidating positions and budgeting. If an employee has a change of heart and wishes to resile from retirement after formally providing notice, is an employer on the hook for wrongful dismissal if they chose to uphold the notice of resignation?

Justice Edwards implemented the principles of contract law to clarify that an employee cannot rescind a clear and unequivocal notice of retirement if the resignation was already accepted by the employer. An employer may voluntarily accept the rescission of the notice to retire but is not obligated to do so.

The Court did allude to certain extenuating factors that may impact the decision, such as whether the employee was induced or coerced to retire.

The Facts

On September 22, 2016, Elizabeth English, the plaintiff, met with her supervisor and provided him with her written notice of retirement, effective December 31, 2016. The plaintiff wrote the notice of retirement herself and was in no way forced into retirement. During the meeting, the plaintiff`s supervisor advised her that she could rescind or reconsider her retirement. She advised various co-workers of her retirement and agreed to allow her supervisor to announce her retirement at a staff meeting. On October 11, 2016, the defendant announced that they would no longer proceed with a computer conversion, which was a key factor in the plaintiff`s decision to retire (rather than being trained on the new system). The plaintiff orally communicated her withdrawal to her supervisor, which was neither accepted or denied, and continued to work.

Approximately one month later the plaintiff was advised that they would not be accepting her rescission and would be honouring her notice of retirement. The plaintiff worked until December 12, 2016, at which point she was told that she need not come back to work.

The plaintiff brought an action against the defendant and sought summary judgment for wrongful dismissal and payment of the sum equivalent to 16 months` salary in lieu of pay.

Summary Judgment Motion

...her letter of retirement formed a binding contract between the parties which could not be resiled from.

The motion judge found that the plaintiff clearly and unequivocally resigned from her employment, largely on the basis that she was not forced into retirement; she did so on her own volition when she provided her notice. More importantly, her letter of retirement formed a binding contract between the parties which could not be resiled from.

As Justice Edwards noted, the law with respect to rescission of a notice of retirement or resignation has evolved and should not spotlight whether the employer acted to its detriment by relying upon the notice. The law as it stands is a reflection of basic contract law, with the offer in the form of a notice of resignation/retirement and an acceptance of that offer by the employer.

In this case, the plaintiff communicated her offer to retire as an employee effective December 31, 2016, at her meeting on September 22, 2016. Her offer was accepted by her supervisor during the meeting and a binding contract occurred between the parties. The defendant was under no obligation to allow the plaintiff to rescind her notice.

Conclusion

Retirement is a hot topic in Canada as the labour force continues to age and employers – large and small – try and grapple with how to draft and enforce succession plans and retirement policies.

... some decisions cannot be reversed.

Deciding when to retire is a very personal decision. What this case emphasizes is that some decisions cannot be reversed. The plaintiff changed her mind, yet lost out on a good, stable job.

The decision should be hailed as a victory for employers nationwide, as the Court found in the favour of the employer despite the fact that the employer did not detrimentally rely on the notice of retirement (by hiring someone else, for example). Just as noteworthy, the Court ruled in favour of the employer despite the employer reversing the very decision upon which the employee based her decision to retire (upgrading the computer system which would require significant training).

For those considering retiring in the near future, the Court sent a clear message: “Be careful what you wish for...”


1 Thomson Reuters, “Teen sexting may be more common than you think”, CBC (26 February 2018)
2 A six month mandatory minimum was applicable in R v John; however, since July 17, 2015, the mandatory minimum sentence for these offences was increased to one year in jail: Tougher Penalties for Child Predators Act, SC 2015, c 23, s 7(2).
3 Canadian Charter of Rights and Freedoms, Part 1 of the Constitution Act, 1982, being schedule B to the Canada Act 1982 (UK), 1982, c 11.

4 R v John, 2018 ONCA 702 at para 29
5 The Oxford English Dictionary, online edition, sub verbo “sext”.
6 Criminal Code, RSC 1985, c C-46, at s163.1 (1).


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