Employer, Litigation

So, you want to quit your job? Beware the pitfalls!

Nov 26th, 2018

By Barry Landy

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The idea that employees cannot be fired without a serious reason, without being given a fair and reasonable notice, (where the employment is for an indefinite term), is widely known. For example, one often hears things like: where an employer wants to fire an employee without a serious reason, the employee should be paid an indemnity equivalent to one month of salary for every year of service. Of course, this is not a rule of law, but rather a rule of thumb which sometimes works and sometimes does not.

Less well-known is the corollary: An employee, even a non-executive, who wants to leave his job has to provide his employer with reasonable notice he is quitting or may be liable to pay the employer damages!

The Quebec Court of Appeal was recently called upon to review the law regarding this issue in the case of Pharmacie Jean-Sebastien Blais Inc. et al v. Pharmacie Eric Bergeron and Jacques Lacombe et al 2018 QCCA 1895.

The facts were relatively simple. Blais and Bergeron operated competing pharmacies in Shawinigan, Quebec. Lacombe was an employee who immediately before quitting had worked at Blais for 40 years, including as a lab technician. Lacombe thus developed a close relationship with the Blais clientele. Lacombe resigned from his job with Blais on August 14, 2012 and began working for Bergeron about one week later on August 20, 2012. This was followed by a migration of Blais clients to Bergeron, supposedly connected to the fact that Lacombe had changed jobs and solicited the clients.

Blais sued both Lacombe and his new employer for damages for loss of profit arising out of the loss of clientele and the cost of the new measures Blais claimed he had to put in place to try to conserve and win back the clients who had left.

The Court of Appeal analyzed the situation as follows:

Lacombe owed his employer Blais a duty of loyalty and honesty. Practically, this meant that during the term of the employment, the employee must not harm the employer, must put the employer’s interest before his own, must not be in a conflict of interest, must act honestly and may not divert the employer’s clientele to earn a profit at the employer’s expense;

  1. Lacombe owed his employer Blais a duty of loyalty and honesty. Practically, this meant that during the term of the employment, the employee must not harm the employer, must put the employer’s interest before his own, must not be in a conflict of interest, must act honestly and may not divert the employer’s clientele to earn a profit at the employer’s expense;
  2. However, these duties are nuanced where the employee leaves his employment without notice. In the absence of any specific contractual stipulations, the employee may be liable to the employer for damages and certain other residual obligations, where he has not given sufficient notice he is quitting. Otherwise, the employee is free to compete with his former employer and does not thereby contravene his duty of loyalty.
  3.  For example, an employee who is leaving his job may make plans for his future employment with a new employer, without thereby placing himself in a conflict of interest situation;
  4.  In short, an employee who chooses to leave his employment without giving appropriate notice may do so without contravening his duty of honesty and loyalty. But that does not mean the employee cannot be liable for damages connected with his obligation to give his former employer reasonable notice of departure.
  5.  The trial Judge had condemned Lacombe to pay damages of $12,000 to Blais on the basis that a reasonable notice of departure would be two months and Blais was making $6,000 per month. On the other hand, Blais had claimed $976,945 for loss of clientele associated with Lacombe’s departure without giving reasonable notice.
  6.  The Court of Appeal explained that the trial judge had erred in calculating the employer’s damages as a function of what the employee had been earning. The Court explained that the correct analysis would be to assess what damages the employer suffered as a result of receiving insufficient notice from the employee, and that these damages could include the additional expenses the employer had to incur, professional fees, or the profits that the employer was not earning as a result of or connected to the work of the quitting employee.
  7.  The court added that multiplying the employee’s salary by the appropriate notice period as a method of evaluating the damages was not an appropriate way to measure the damages.
  8.  In terms of calculating the length of the notice period that the employee had to give the employer, the Court agreed that for an employee such as Lacombe, 2 months was appropriate, based on the employee’s good faith, his job description, status as a key employee, contacts with the clientele, salary and the length of his employment.
  9.  In terms of assessing the damages, the Court held that the employer had the burden to be able to prove that the loss of clientele was a direct consequence of the employee’s failure to give notice. Blais testified that clients were telling him they left to follow Lacombe, but no clients testified. Also, Blais did not make proof as to what measures he could have put in place during the notice period to keep the clients. In short, the proof was unclear regarding how the clients would have reacted if they had been contacted. The Court was not prepared to indemnify the employer for the actual value of the lost clients but rather for the loss of profits directly caused by the failure of the employee to give proper notice. This point of view imposes a very high burden of proof on the employer to actually justify what portion of the lost clients was caused by the failure of the employee to give proper notice. In the result, the Court of Appeal, while disagreeing with the methodology of the trial judge, refused to intervene on the question of what damages the employer was entitled to claim.

So the lesson to be learned is this: If you are an employee and you want to leave your job, think long and think twice about doing so with providing your employer with reasonable notice.

 

This publication is of a general nature, is as of the date indicated and is not intended to constitute an opinion or legal advice.  The facts and circumstances of your particular situation should be specifically identified and addressed before appropriate legal advice may be given.