Do I still need to give required notice if I’m not being paid?

THE QUESTION

I have an employment agreement that states that I must give one month of notice when resigning. However, the company has been experiencing financial difficultly and has been missing/delaying payroll. They are now six weeks behind in paying me. So can I submit my resignation backdated by a month and end my employment immediately?

THE FIRST ANSWER

Shane King

Partner, litigation & dispute resolution group, McLeod Law LLP, Calgary

Generally speaking, backdating your resignation for one month and ending your employment immediately has the same effect as not providing any notice whatsoever.

The purpose of the notice period is to provide actual notice of your intention – your impending departure – so the employer may prepare itself by hiring a new employee.

However, the fact your employer has not paid you for six weeks may have put it in breach of the contract, such that the contract can be deemed at an end. If that is the case, it may be that none of the termination provisions will be required to be upheld, so there may not be a requirement for any notice to be provided by you.

The next question that must be asked is what are the ramifications for you in not providing any notice of departure whatsoever, which is essentially what you are seeking to do.

Assuming your employer is not in breach of the contract, if you do not provide notice as the employment agreement requires, and the employer is required to hire someone on an emergency basis to perform your duties, and it has to pay that individual more than it paid you owing to your sudden departure, the employer's recourse could be to seek the difference between what it paid you and what it is required to pay the new individual.

This would be quite rare and is something I have only seen threatened once in my 15 years of practice. I suppose if the employer misses out on an opportunity owing to your sudden departure, it could also seek the lost revenue from that opportunity, if that loss is directly tied to your departure without notice.

Finally, be aware there may be recourse for you for the unpaid wages from the directors of the company, if the company itself is not paying you.

THE SECOND ANSWER

Daniel Lublin

Partner, Whitten & Lublin Employment Lawyers, Toronto

You do not need to backdate your resignation letter.

The fundamental bargain when you attend work is that you will be paid for your time.

Unless you previously agreed that the company can delay or defer your paycheques, it is a violation of your employment rights for which you can assert a constructive dismissal and leave.

In other words, the non-payment or late payment of your compensation justifies your immediate departure and negates any requirement for you to provide notice of a resignation because, in effect, the company already implicitly fired you.

In addition to your unpaid wages, which you can claim personally against the directors of the company, you could also claim severance.

My main concern, however, is that, given its financial difficulties, if you cannot get the company to pay your current salary now, then you may have an even bigger problem collecting any money recovered in court later.