When an employee resigns, most employers breathe a sigh of relief. No termination package to negotiate, no risk of wrongful dismissal claims. But mishandling a resignation can still expose your organization to legal liability.
Here’s how to navigate the resignation process properly.
Accept the Resignation Clearly
When an employee submits their resignation, acknowledge receipt in writing immediately. Your acknowledgment should confirm the resignation date, the employee’s last day of work, and any transition expectations.
This documentation matters. Employees occasionally attempt to retract resignations, claiming they acted in the heat of the moment or under duress. A clear written acknowledgment, followed by your acceptance, makes retraction far more difficult.
Don’t Rush Them Out the Door
Many employers, upon receiving a resignation, immediately escort the employee from the building. This reaction often backfires.
If you refuse to allow employees to work their notice period, you’ve effectively terminated them. This means you may owe termination pay under the Employment Standards Act (ESA) for the notice period they offered but you declined. A two-week notice period you reject becomes two weeks of wages you owe.
Unless you have legitimate security concerns, allow resigning employees to work through their notice. If you prefer they leave immediately, pay them for the notice period they provided.
Handle Final Pay Correctly
Ontario’s ESA requires employers to pay all outstanding wages within seven days of termination or on the employee’s next regular pay date, whichever comes later. This includes salary, accrued vacation pay, and any earned bonuses or commissions.
Withholding final pay, even when you believe the employee owes you money for training costs or damaged equipment, violates the ESA. Employers cannot make deductions from wages without written authorization from the employee for that specific amount.
If you have a legitimate claim against the departing employee, pursue it separately. Don’t self-help by withholding their final paycheque.
Conduct a Proper Exit Process
A thoughtful exit process protects both organizational knowledge and legal interests. Consider the following steps:
Return of company property. Document all equipment, keys, access cards, and confidential materials returned. Use a checklist signed by both parties.
System access. Disable access to company systems, email, and sensitive data promptly but not punitively. Locking someone out before they’ve finished their notice period sends a hostile message.
Exit interview. These conversations provide valuable feedback about workplace culture and management practices. They also create documentation showing the resignation was voluntary.
Confidentiality reminders. Remind departing employees of ongoing confidentiality obligations and any restrictive covenants in their employment agreement. Do this in writing.
Watch for Constructive Dismissal Traps
Sometimes a resignation isn’t truly voluntary. If your actions forced the employee’s departure, through demotion, significant pay reduction, harassment, or intolerable working conditions, you may face a constructive dismissal claim despite receiving a resignation letter.
Be particularly cautious if the resignation follows workplace conflict or recent changes to the employee’s role. What appears as a voluntary departure might be characterized very differently before a court or tribunal.
Get Professional Guidance When Needed
Most resignations proceed without incident. But when circumstances seem unusual,a key employee’s sudden departure, resignation under emotional distress, or a departing employee threatening legal action, consulting Employment Lawyers before responding protects your organization.
Proper handling of employee resignations maintains positive workplace relationships, protects institutional knowledge during transitions, and keeps your organization on solid legal footing. The few minutes spent following proper procedures can save significant expense and disruption later.
