A phone call from a manager can change an employee’s entire week in a matter of minutes.
One moment, everything appears normal. The next, an employee is sitting in a meeting and hearing that their position is no longer secure. The employer may present what sounds like a simple choice: leave voluntarily and receive some money, or remain employed and face termination.
For someone with years of service, that conversation can be confusing and frightening.
Should they take the offer? Should they refuse? Does signing a resignation mean they lose all employment rights? Could the circumstances amount to constructive dismissal? And is the employer’s proposed severance actually fair?
Those questions are at the heart of a recent discussion in the LegalPlaybook subreddit. An employee described being with an employer for years, receiving positive performance feedback, and then finding themselves placed on a performance improvement plan after a management change. According to the employee’s account, the situation eventually resulted in an offer to resign in exchange for severance.
The original discussion can be found on Reddit here.
While the Reddit post represents only the employee’s account and cannot determine whether any law was actually broken, it highlights a situation that employees should understand before they encounter it themselves.
The Difference Between Leaving and Being Let Go
The first question is deceptively simple: who actually ended the employment relationship?
If an employee independently decides to leave, that is generally characterized as a resignation.
If the employer decides to end employment, it is generally a termination.
But real-world workplace situations do not always fit neatly into those two categories.
An employee may resign because of what the employer has done or because the employer has created circumstances in which continuing to work is no longer realistically possible. Depending on the circumstances and applicable law, that can raise the issue of constructive dismissal.
This is why the surrounding events can matter.
The words “I resign” may appear on a piece of paper, but the circumstances leading up to that document can also become relevant.
A Resignation Offer Is Not Necessarily a Simple Offer
Imagine that an employer offers an employee $10,000 to resign.
At first glance, the calculation seems straightforward: accept $10,000 or risk getting nothing.
But there may be considerably more involved.
The employer could require the employee to sign a release. That release might cover certain claims against the company. The agreement could also address benefits, vacation, confidentiality, references, company property, taxes, or other obligations.
Consequently, the employee is not necessarily being asked to exchange a resignation for a cheque.
They may be exchanging potential legal rights for a negotiated settlement.
That distinction is important.
What Does Constructive Dismissal Have to Do With It?
Constructive dismissal is often discussed when employees say they were “forced to quit.”
The legal concept is more specific than simply feeling pressured or unhappy.
The Government of Canada explains that constructive dismissal may arise where an employer unilaterally makes a significant change to the employment relationship or demonstrates a settled intention to make such a change.
The exact rules can vary depending on the applicable jurisdiction.
This means that an employee should not automatically conclude that a “resign or be fired” conversation constitutes constructive dismissal.
Likewise, an employee should not automatically assume that it does not.
The facts have to be examined carefully.
A Performance Improvement Plan Can Be Legitimate
A performance improvement plan, commonly called a PIP, is not inherently evidence of wrongdoing by an employer.
Employers can legitimately use PIPs when they believe an employee is not meeting required standards.
A PIP may establish expectations and provide an employee with an opportunity to improve.
Problems can arise when there is disagreement over what the performance problems actually are.
For example, an employee may receive criticism about “communication,” “teamwork,” or “attitude.” Those descriptions can mean very different things depending on the circumstances.
A strong performance-management process generally benefits from specific examples and measurable expectations.
If an employee is told to improve but does not understand what successful improvement looks like, they may have difficulty responding to the employer’s concerns.
That is one reason written documentation can become important.
Six Years of Good Reviews Does Not Automatically Settle the Dispute
The employee in the Reddit discussion describes a history of positive performance before the PIP.
If an employee has years of favorable reviews followed by sudden criticism, it is natural to question what changed.
But a sudden change in performance feedback does not automatically establish that the employer acted improperly.
A new manager may have different expectations.
The employee’s responsibilities may have changed.
The business may have introduced new standards.
The employee’s performance may genuinely have changed.
Or there could be a disagreement about whether the criticisms are justified.
The historical record is therefore important context, but it is not by itself proof of a legal claim.
Why Employees Should Save Their Employment Documents
When a workplace dispute begins, employees sometimes realize that they have very little documentation.
That can make it difficult to reconstruct what happened months later.
An employee should consider keeping copies of documents they are permitted to retain, including:
- Employment agreements
- Job descriptions
- Performance evaluations
- Compensation documents
- Promotion records
- PIP documents
- Written instructions
- Relevant emails
- Messages concerning performance
- Severance proposals
- Resignation agreements
Employees should avoid taking confidential business information or material they are not entitled to possess.
The purpose of maintaining appropriate records is simply to preserve an accurate history of the employment relationship.
Don’t Assume the First Severance Offer Is the Final Answer
One of the most important questions is whether an employer’s severance proposal reflects the employee’s actual legal entitlement.
The answer cannot be determined from the offer alone.
For example, Ontario’s employment standards framework contains rules relating to termination notice and termination pay. It also separately addresses statutory severance pay for employees who meet the relevant requirements.
An employee’s rights may also depend on the employment contract and common-law principles.
Therefore, an employer’s statement that “this is all you’re entitled to” should not necessarily be accepted without reviewing the underlying agreement and applicable law.
The Employment Contract Could Be Crucial
Many employees sign their employment contract when they are hired and never look at it again.
That can be a mistake when employment ends.
The contract may contain a termination clause that directly affects what happens when employment is ended without cause.
It may also contain provisions dealing with bonuses, commissions, benefits, vacation, fixed terms, probation, or other issues.
An employee who is presented with a resignation package should therefore locate their employment contract before making a decision.
Even a seemingly small clause can become important when the employment relationship ends.
What Is the Difference Between Wrongful and Constructive Dismissal?
These terms are sometimes used interchangeably online, but they describe different legal concepts.
Wrongful dismissal generally concerns whether an employer failed to provide the notice or compensation required when terminating an employee, based on the applicable legal framework.
Constructive dismissal generally concerns circumstances in which the employer’s conduct is treated as effectively ending the employment relationship, despite the employee formally resigning.
The distinction matters because the legal analysis can be different.
HTW Law provides employment-law resources explaining the distinction between wrongful dismissal and constructive dismissal, along with information about employment termination issues.
Employees interested in learning more can visit the firm’s official HTW Law website.
Its resources on wrongful dismissal discuss circumstances surrounding termination and the potential significance of contractual and legal rights.
What Should an Employee Say When Presented With a Resignation Agreement?
Employees sometimes feel that they need to answer immediately.
They don’t necessarily need to.
If an employer presents an agreement, an employee can ask for a copy and take time to review it.
A simple response such as “I’d like to review the agreement before signing” can avoid making a rushed decision.
The employee can also ask practical questions:
- How much is being offered?
- When will payment be made?
- What happens to benefits?
- What happens to unused vacation?
- Is the payment conditional on signing a release?
- Are there confidentiality obligations?
- Does the agreement affect references?
- What happens if the employee does not accept?
The answers can substantially change the employee’s understanding of the proposal.
Why a Release Deserves Particular Attention
The release is often one of the most significant parts of a severance agreement.
In exchange for payment, the employer may ask the employee to release certain legal claims.
That means an employee should not focus exclusively on the payment amount.
A $15,000 offer and a $15,000 offer with a broad release can have very different practical consequences depending on the employee’s circumstances.
Before signing, the employee should understand what rights the agreement is asking them to give up.
What If the Employee Says No?
Refusing a resignation offer does not necessarily mean the employee wins or loses.
The employer could withdraw the offer.
The employer could continue managing the employee’s performance.
The employer could make another proposal.
Or the employer could terminate the employment relationship.
The legal consequences depend on what happens next.
That is why it is generally unhelpful to think about the decision purely as “take the money” versus “get fired.”
The employee should instead compare the actual legal and financial consequences of each possible path.
Why Getting Advice Early Can Help
Legal advice is often most useful before an agreement is signed.
Once an employee signs a settlement and release, their ability to pursue certain claims may be affected.
An employment lawyer can review the contract, performance documents, severance offer, and surrounding circumstances and explain the potential issues.
For employees in Ontario, HTW Law’s employment resources provide information about areas including wrongful dismissal, constructive dismissal, severance, and related employment matters. The firm’s official website is available at htwlaw.ca.
The goal of obtaining legal advice is not necessarily to start a lawsuit.
Sometimes the most useful outcome is simply understanding what an agreement means before deciding whether to accept it.
Don’t Let the Pressure Make the Decision for You
An employer may genuinely believe that termination is appropriate.
An employee may genuinely believe that the employer’s criticisms are unfair.
Both sides can have strongly different views of the same workplace events.
But the employee should not allow the pressure of the meeting itself to determine what happens next.
Take the documents.
Read them carefully.
Review the employment contract.
Understand the payment.
Understand the release.
Keep appropriate records.
And, where the financial or legal stakes justify it, obtain independent advice.
A Workplace Ultimatum Can Have Long-Term Consequences
The biggest mistake an employee can make is treating a resignation agreement as though it were simply an HR form.
It may be much more significant than that.
The agreement could determine how the employment relationship ends, what compensation is received, what claims are released, and what obligations continue after departure.
That is particularly important for long-serving employees who may have accumulated substantial contractual or legal rights over the course of their employment.
Final Takeaway
The phrase “resign or we’ll fire you” can make an employee feel as though the decision has already been made.
But before signing a resignation letter or severance agreement, employees should stop and examine the situation carefully.
A performance improvement plan does not automatically mean an employee has no rights. A resignation label does not by itself answer every constructive-dismissal question. And an employer’s first severance proposal does not necessarily establish the employee’s full legal entitlement.
The facts, contract, applicable legislation, and exact wording of the agreement all matter.
The Reddit discussion that prompted this article is a useful example of why employees should approach these situations carefully. A workplace disagreement can quickly become a legal and financial issue when an employer proposes that an employee leave voluntarily.
Ultimately, the most important question is not simply “Should I take the money?”
It is:
“What exactly am I agreeing to, what am I giving up, and what are my rights if I don’t agree?”
Understanding those questions before signing can help an employee make a decision based on information rather than pressure.
Leave a Reply