Ontario Court: Don’t rush to accept resignation of depressed employee

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One would think that when an employee submits his or her resignation and the employer accepts it, that is the end of the matter. However, a recent court decision demonstrates that when the employee’s resignation is linked to a disability, and the employer is aware of this fact, the employer has certain duties to discharge before accepting the resignation.

Menard v. Royal Insurance Co. (June 7, 2000) involved an insurance adjuster with 14 years of service with the employer. Following corporate restructuring, Menard’s job became increasingly stressful, causing her to take medical leave. Menard attempted to resign, but Royal declined to accept, suggesting she consider taking short or long-term disability. She returned to work and, although her difficulties in coping with her workload persisted, managed to obtain positive performance reviews.

However, her performance again became a matter of concern for Royal. Eventually, Menard submitted a letter of resignation that Royal immediately accepted, this time without any attempt to suggest alternatives. In an exit interview two weeks later, during which Menard was clearly distressed, Royal again made no effort to advise her of the availability of disability benefits.

The court found that, at the time of her resignation, Menard was suffering from depression that impaired her judgment. Noting that courts have held that employers have a duty to provide benefits to eligible employees at the time of termination, the court ruled that Royal, by not raising the issue of Menard’s eligibility for benefits, had constructively dismissed her:

    “The contractual obligation to provide short-term sick leave continued to exist [at the time of Menard’s termination]. … By processing the termination without reviewing the benefit plans with Menard in the face of all of the facts pointing to her disability, Royal demonstrated its intention not to be bound by the employment contract.”

Royal had the right to accept her resignation, the court noted, but only after meeting its obligations to act in good faith and to point out to this obviously disabled employee her entitlement to the benefits which were part of the compensation package for which she had worked for 14 years.

For further information, please contact Lynn Harnden at (613) 563-7660, Extension 226.