I am often asked whether a change in employment (or more than one change) is a constructive dismissal. If so, the employee can quit and claim damages for pay in lieu of notice of termination. If not, the person receives no damages. It is an all or nothing proposition. And that is why employment lawyers do not like answering this question.
Definition of Constructive Dismissal
The definition of a constructive dismissal was set out in the Supreme Court of Canada’s decision in Farber v. Royal Trust Co., 1997 CanLII 387 (SCC) as follows:
“A constructive dismissal occurs when an employer makes a unilateral and fundamental change to a term or condition of an employment contract without providing reasonable notice of that change to the employee. Such action amounts to a repudiation of the contract of employment by the employer whether or not he intended to continue the employment relationship. Therefore, the employee can treat the contract as wrongfully terminated and resign which, in turn, gives rise to an obligation on the employer’s part to provide damages in lieu of reasonable notice.”
Applying the Law to the Facts of a Specific Case
The difficultly for lawyers is applying this test to a specific fact situation.
This blog summarizes five constructive dismissal cases that were decided in 2014.
1. Change in an employee’s hours of work: Ferdinand Oca v Home Depot of Canada Inc, 2014 CanLII 39381 (ON LRB). Mr. Oca was employed for many years as a day shift order picker. In or about early October 2011 Mr. Oca was moved to the night shift (8:00 p.m. to 4:30 a.m.) In early January 2013 Mr. Oca was advised that his hours of work would be changed from 8:00 p.m. to 4:30 a.m. to 10:00 p.m. to 5:30 a.m. Decision: Adjudicator concluded that the change in hours was not a constructive dismissal within the meaning of section 56(1)(b) of the Employment Standards Act.
2. Employer repeatedly pays wages after the employee’s regular pay day: Ma v VE Collective Inc, 2014 CanLII 39566 (ON LRB). Decision: The adjudicator concluded that late payment of wages was a constructive dismissal within the meaning of section 56(1)(b) of the Employment Standards Act.
3. Demotion: Farwell v. Citair, Inc. (General Coach Canada), 2014 ONCA 177 (CanLII).Decision: A transfer from Operations Manager/Vice President of Operations to the position of Purchasing Manager was found to be a constructive dismissal.
For my case comment on this decision, click here.
4. Employer excludes employee from the financial affairs of the company, and subjects her to a poisoned work environment: Scott v Specs Appeal Inc, 2014 CanLII 45319 (ON SCSM). Decision: Unilaterally terminating plaintiff’s involvement in the financial management of the company, and subjecting the employee to a poisoned work environment caused by marital discord between plaintiff and her spouse, the employer’s President, constituted a constructive dismissal.
5. Employer delays a promised promotion. Penteliuk v. CIBC World Markets, Inc., 2014 ONSC 2105 (CanLII). Decision: No constructive dismissal occurred. “Although I have concluded that World Markets did not agree to promote Mr. Penteliuk to the FIG Team Leader position by a fixed date, I find that it was fair in the circumstances for Mr. Penteliuk to have the expectation that he would be formally installed into the FIG Team Leader position within a reasonable period of time…. I find that Mr. Penteliuk raised no clear objection to the timing of his promotion to FIG Team Leader until December 17, 2004, when he tendered his letter of resignation.”
To decide whether or not a constructive dismissal has occurred, a lawyer must carefully review the agreed upon terms and conditions of employment, and the change (or changes) that the employer has unilaterally imposed on the employee without the employee’s agreement.
For the past 25 years, Doug MacLeod of the MacLeod Law Firm has been advising employers and employees on all aspects of the employment relationship. If you have any questions, you can contact him at 416 317-9894 or at [email protected]
A recent case underscores the importance of including a properly drafted termination clause in your organization’s employment contract. The Facts In March 2010, CIGI hired Mark Menard, a chartered accountant, as Senior Director of Finance. He was responsible for the...read more
If you are a director or a party to a unanimous shareholder agreement did you know that you are personally liable for unpaid wages and you could go to jail for up to one year for failing to pay them? So if you are a small business owner, have signed a unanimous...read more
Some recent changes in the law make Ontario’s employment laws more employer-friendly - especially for small businesses. This blog discusses five of these changes. Eliminating a scheduled increase in the minimum wage Under Bill 148, the minimum wage was scheduled to...read more