In its recent decision in RBC Dominion Securities Inc. v. Merrill Lynch, the Supreme Court of Canada has reinforced an employee’s duty to provide reasonable notice of resignation as well as, reestablished an employee’s duty of good faith towards his or her employer.
The decisions stems from a case where branch manager Don Delamont arranged the mass departure of virtually the entire branch staff, and as a result, a large volume of the branch’s client base.
The Court awarded damages to RBC on 2 separate but similar fronts;
1. Damages payable by Delamontfor nearly $1.5M for breach of his fiduciary duty of good faith to his employer. The damages being calculated by estimating the branch’s losses for the 5 year period after the exodus; and
2. Damages payable by the non-management employees who failed to provide reasonable notice of their resignation. These damages were calculated based on the losses to RBC over a 2.5 week period, which amount to about $40,000 total.
What to take from this case? Management employees have a fiduciary duty to retain clients and employees. Also, because the Court established that non-management employees do not have the same fiduciary duty, employers may consider including more favorable resignation provisions into its employee contracts.
For employees, the decisions confirms the common law duty to provide fair resignation notice. This is much like an employer’s duty to provide fair termination notice to an employee.