Legal News

BC Supreme Court Rules That Duty of Departing Employee To Provide Employer With Reasonable Notice May Be Tied To Employee's Duty Not To Compete Unfairly

The Supreme Court of British Columbia recently confirmed that a departing employee has a duty to provide reasonable notice of resignation to his or her employer. The amount of notice that is considered reasonable will vary depending on the circumstances. Where an employee’s post-employment conduct amounts to unfair competition against the former employer, the courts may award damages for losses incurred as a result of proper notice not being provided.

The defendants in the case were a group of investment advisors and their manager. The defendants left the Cranbrook office of RBC Dominion Securities en masse, and immediately began working at Merrill Lynch Canada, in direct competition with their former employer.

The Court confirmed that it is an implied term of a contract of employment for an employee to provide reasonable notice of departure. In the circumstances, the Court linked the amount of notice required, to the effect that such notice would have had in preventing the departing employees from immediately competing unfairly with their former employer for clients. In other words, the appropriate length of any such notice was tied to an analysis of whether the defendants’ conduct amounted to a breach of their post-employment obligations to RBC Dominion Securities.

The Court concluded on the facts that the defendants had removed confidential client information and had unfairly solicited clients of their former employer immediately following their simultaneous departure. This amounted to unfair competition. Had they provided reasonable notice, the employer would have at least been in a position to reassure clients that it would provide satisfactory service through replacements. As a result, the defendants were found liable for compensatory damages resulting from their conduct, including their failure to provide reasonable notice of departure. The amount of damages, including whether punitive damages should be awarded, was reserved pending submissions from the parties.

This case emphasises that the amount of notice required from a departing employee will vary depending on the facts. The period of reasonable notice is not simply the reciprocal of the notice of termination that would be required of the employer; nor is industry practice necessarily determinative. Rather, the courts will look at all of the surrounding circumstances, including an employee’s post-employment conduct, to determine a period that is sufficiently reasonable under the circumstances to allow the employer to react to the employee’s departure.

RBC Dominion Securities Inc. v. Merrill Lynch Canada Inc., 2003 BCSC 1773, November 26, 2003.