Are You Sure You’re Ready to Retire? Don’t Hand in Your Notice Early!

 In Employment Law

An employee who hands in their notice of intent to retire is likely to be held to its terms, even if they have second thoughts.

English v Manulife Financial Corporation, a recent decision from the Ontario Superior Court of Justice, found that an employee who submitted her notice of intent to retire had created a binding contract with her employer upon the employer’s acceptance of the notice.

The plaintiff employee drafted her own “Notice of Retirement” and submitted it to her supervisor. Several weeks later, and upon learning that a previously planned workplace restructuring was no longer happening within the company, the employee attempted to unilaterally rescind the Notice of Retirement.

The court found that because the plaintiff employee drafted the Notice of Retirement herself and voluntarily submitted it to her employer, her intent to retire from her position was apparent. In other words, this act represented a clear and unequivocal intention to retire or resign from her position, which her employer relied upon. Even though the employee and company representative had a chance to discuss whether the employee might change her mind, the employee nevertheless submitted the Notice of Retirement, and it was accepted by her employer. This acceptance created a binding contract.

Justice Edwards wrote that the employer had no obligation to accept the rescission and that to allow the employee to withdraw her Notice of Retirement did not amount to a wrongful dismissal as argued by the employee.   Justice Edwards went on to say that once the employee submitted her Notice of Retirement and it was accepted by the employer, there was a contract to retire; the employer was entitled to rely on its terms.  To agree with the employee and force the employer to accept her withdrawal would, in Justice Edwards’ words, “fly in the face of basic contractual principles.”

Significant to the decision was the Court discovered as a fact that the employer had “acted upon” the Notice of Retirement. It is worth asking whether the decision would have been different if the employer had not relied on the Notice of Retirement. The Court also took care to note that the plaintiff employee was not induced in any way to submit the Notice of Retirement, instead finding that she chose to do so willingly. Should inducement have been a factor, it is likely the court would have found the attempted rescission valid.

The takeaway from this case is that both employees and employers should be careful when submitting or accepting a notice of retirement. Both parties should leave a meeting where an employment relationship ends with a clear and unified understanding of the terms of an employee’s employment status. Capturing any discussions in writing is a beneficial way to ensure that both parties are on the same page when an employee is looking to retire.

Shauna Cant is a member of the Commercial Litigation team. She can be reached at 613-369-0359 or at shauna.cant@mannlawyers.com.

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