Employees leave companies for a variety of reasons, and sometimes it's completely unavoidable.
How you handle resignations can have a range of effects for other employees and your company. Failure to deal with them correctly can lead to a dip in employee morale and productivity.
In this guide, we'll discuss what resignation is, why people leave their jobs, and the steps you can take to avoid resignations.
What Does it Mean to Resign from a Job?
A resignation is when an employee quits their job voluntary. In leaving their job, the employee loses the responsibilities and benefits that are included in their employment contract, such as salary.
Which Industries Have the Highest Resignations?
In 2021, in customer-facing sectors, such as hospitality and food services, resignations increased from the previous year.
These industries typically take on new hires on a temporary basis over a busy period, such as the holidays.
There has been an increase in resignations in a range of industries and sectors, with experts dubbing it the so-called great resignation.
What's the So-Called Great Resignation?
The great resignation started in 2021 after a record number of workers quit their jobs.
It's left a massive hole in Canada's job market, which has been linked to younger employees and millennials:
Studies surrounding the great resignation have found workers between 30-45 have a 20% increase in resignation rates.
Companies in Canada are looking to fill over 900,000 job vacancies, which is an increase of 80% in the past year following the great resignation (as per Statistics Canada).
It remains a prominent feature of the labor market. With a higher number of vacancies available, more people quit their jobs in order to find more suitable work.
Why Do Employees Resign?
Workers choose to quit their jobs for a number of reasons. Many people choose to resign siting unhappiness with their current job or employer. It’s also linked to changes made to their department. For example:
- Managerial changes.
- Changes to processes and routines in the workplace.
- A change in company policy.
As an employer, it’s crucial you understand other reasons why people decide to move on. These include:
Retiring From Work
Whilst most people resign to switch to new jobs rather than leaving the labor force altogether, some employees resign simply to retire.
People use their retirement years to start new hobbies or to spend more time with loves ones.
Changes to the Job Market
Changes to the job market can lead to an employee resigning from their post.
For example, the Covid-19 pandemic has led to an uncertain job market and a decrease in demand for labor in some industries, leading to more people looking for work.
Been Offered a New Job or Opportunity
Many people consider leaving their roles and starting jobs with other employers. This can either be a complete career change, switching roles for a new challenge or, having been offered a vacancy elsewhere.
A lack of wage growth and progression in a current role could lead to many employees switching jobs to source more money from another business.
Relocating or Moving Away
A worker may choose to leave because they are relocating and starting a new life elsewhere. This could be for educational purposes, family reasons, or simply to take up a new role within the same company elsewhere.
Lack of Work-Life Balance
The modern employee is looking for the perfect work-life balance away from the office. An unmanageable workload could lead to severe unhappiness and potential resignation.
As an employer, it's key you don't overwork your current employees. Failure to control their workload could mean a higher rate of resignations.
Four Steps to Avoid Employee Resignations
Resignations from workers are unavoidable, especially during the great resignation.
However, there are steps employers can take to keep the number of employees quitting as small as possible.
For example, you could provide your workers with the chance of remote work a couple of days a week.
Avoid Employee Resignation by Creating a Healthy Company Culture
A toxic workplace atmosphere in a company can lead to an increase in employees quitting.
By creating a healthy workplace culture, your employees will be happier - and will be less likely to seek other employment. The following are steps you can take to:
- Show appreciation to your employees daily.
- Reward and recognize hard work.
- Promote employee wellness and mindfulness.
- Provide your employees with a clean and comfortable office.
Communicate and Have Open Dialogue With Your Workers
Make sure you're in constant communication with your current and new employees - discussing any issues they may be having.
By creating an open dialogue, you can support your workers and solve any problems they have which may lead them to potentially quit their roles.
You should also discuss their last job with them and find the reasons for them leaving. For example, lack of benefits and wage growth.
Align All Employees to a Clear Set of Goals
Set clear and concise goals for your employees. Make sure these goals don't change regularly and hold regular meetings and discuss ongoing progress.
An employee who feels their goals are achievable with a clear development pathway are more likely to be happy at work and not look for alternative employment.
Regularly Review Wage Growth and Benefits
Ensure you regularly review your employee wages and benefits to keep up with your industry rivals. Failure to match other companies with the salary they're offering their workers - could lead to a dip in employee morale and an increase in employees resigning.
The modern-day employee keeps up to date with job vacancies elsewhere, if they feel they're not being paid on par with others, they'll seek other employment.
As an employer, you must accept an employee's resignation - whether you agree with it or not. How you react following a resignation, can affect other workers and your business.
The following are steps you can take in order to manage any resignations you may face.
- Ensure you don't cause friction and remain calm. As frustrating as it may be, it's their choice to leave - not yours.
- Have a conversation with the employee to fully understand why they're leaving.
- Continue to treat them equally to other workers.
- Provide them with enough work to complete until their final day.
Failure to do so can lead to a negative connotation for you as an employer.
Create an Employee Resignation Process
Create a clear and concise employee resignation process. This process should include what happens when an employee resigns from their role:
- Handing in their notice, such as a resignation letter.
- An exit interview between employer and employee.
- What work can be completed in their notice period.
- Any handovers to other employees taking on an increased workload.
- Any additional support required.
Ensure this process is included in the employment contract, understand and signed by both parties before employment starts. This will hopefully avoid any conflict between employer and employee over the resignation in the future.
You should also protect confidential information by sending a notice to your IT department and the financial department regarding their last day of work.
Communicate A Resignation to the Rest of the Team
After receiving an employee’s intention to resign, ensure you communicate their decision with the rest of the team. This doesn't only stop any potential gossip from spreading but also shows colleagues you're open to communicating with them.
The last thing you want is the resignation to spark fears in the remaining workforce.
To manage employee resignations correctly, you need to understand the effects they can have on your other employees and your business.
Determine the Impact of a Resignation on Your Key Business Metrics
To fully determine the impact resignations can have, you first need to understand your employee turnover rate.
By using the following formula, employers can track the rate at which employees leave:
- Number of employees leaving per year divided by the average total number of employees. This will give you your turnover rate.
Resignations can affect the following:
- Employee morale.
- Productivity, due to increased workloads for others during the hiring process.
- Disrupt working routines.
- Could potentially lose knowledge and a key skillset the person resigning has.
The above effects all contribute to one thing - less profit for your company. By understanding the ripple effects resignations have on your company, you're more likely to want to manage them correctly.
Does an Employee Need to Submit a Resignation Letter?
There's no legal obligation for someone resigning to submit a letter of resignation.
However, a letter is a better way of handing a resignation as there's a physical and dated record.
This will help with any potential conflicts surrounding notice periods and help with the working relationship.
Is a Notice Period Mandatory for a Resignation?
Your employment contract may state the amount of notice required that must be given to employers for resignations. The following provincial notice periods must be adhered to:
- Ontario: Two weeks if employed for over one year but less than three.
- British Columbia: Two weeks if employed for over one year but less than three.
- Alberta: Two weeks if employed for two years but less than four.
- Manitoba: Two weeks if employed for over one year but less than three.
- Saskatchewan: Two weeks if employed for over one year but less than three.
Do Employees Have to Work Their Notice Period?
Employees aren't entitled to work the whole of their notice period. As an employer, you have a right to shorten this period.
If you choose to shorten their notice period, you need to offer termination pay in lieu. You need to be aware that the employer must pay the employee all the wages they're entitled to at the end of the notice period.
This process must be included in the employment contract and signed by both employer and employee at the start of employment.
Can Employees Receive Unemployment Benefits Following Resignation?
Employees in Canada can receive unemployment benefits if they have not lost their job due to preventable circumstances, for example, misconduct.
Receiving these benefits will help them support them financially if they're planning to be out of work for a while.
An Employer Cannot Force an Employee to Resign
Resignations are completely voluntary. An employer cannot under any circumstance force one of their employees to resign. Forcing someone to leave their job can potentially be constructive dismissal.
Forcing an employee to resign is a violation of employment law and can potentially lead to legal trouble in the future.
Changing someone's working conditions intentionally and leading them to quit is also constructive dismissal.
In Canada, there's a principle alongside resignation called job abandonment.
What's Job Abandonment?
Job abandonment comes about following an implied term of an employment contract being broken.
Examples of implied terms are:
- Every employee will attend work and perform the roles expected of them.
- Employees will be on time for their shifts.
- Employers will pay their staff correctly.
Although not stated in the employment contract, these terms shouldn't have to be formally written down for them to be stuck.
Job abandonment happens when an employee breaks implied terms without a reasonable explanation. Examples of reasonable explanations are sickness leave and maternity leave.
How do You Prove Job Abandonment?
The way job abandonment can be proven is when the situation is viewed objectively by a reasonable person. The reasonable person must prove that the employee has no intention of sticking to the contract agreed with the employer.
Get Advice on Resignations with BrightHR
Employees quitting their roles is sometimes unavoidable, but as an employer, it’s key you manage them correctly.
Failure to do so can lead to negative effects, such as a dip in morale and productivity. There are also steps you can take to keep the number of resignations down to a minimum.
If you need advice on resignations, BrightHR has a handy tool that will help if required.
Our BrightAdvice service allows you to receive expert employment law advice whenever required.