A pair of Ontario Court of Appeal (OCA) decisions show why it is sometimes difficult to advise employers and employees on their rights and obligations, says Toronto employment lawyer Doug MacLeod.
The two constructive dismissal cases both involved a game of “mental gymnastics,” says MacLeod, principal at MacLeod Law Firm.
In Farwell v. Citair, Inc. (General Coach Canada), 2014 ONCA 177 (CanLII), a 58-year-old man quit after he was demoted after 38 years of service.
The employer argued the man had a duty to mitigate his damages by accepting the demotion, says MacLeod. The OCA concluded that the man was not required to accept the demotion because the employer did not offer the employee the demotion again after he quit.
“The court said the employer should have offered the demotion again,” says MacLeod. “So by making that very small change, the decision suggests the employee would have been obliged to accept the demotion.”
Wronko v. Western Inventory Service Ltd., 2008 ONCA 327 (CanLII) is another example where the OCA imposed a new obligation on an employer, says MacLeod.
The employer provided an employee with two years’ notice that his termination pay entitlement would be reduced from 24 months to 30 weeks, says MacLeod.
“At the time, it was generally accepted that an employer could provide reasonable notice of a change in a fundamental term of employment,” he says, noting the employee objected to the proposed change but kept working.
Two years later, the employer asked the employee to sign an employment contract with a 30-week termination clause and told him if he refused to sign it “then we do not have a job for you,” says MacLeod. The employee was not prepared to sign the contract, thought he was fired and sued for wrongful dismissal.
The OCA awarded the employee 24 months’ pay less the income he earned during the two-year period after his termination. The OCA also stated the employer could have avoided this result if it had initially informed the employee that his refusal to accept the new termination entitlement would result in his termination and that re-employment would be offered on the new terms.
“In both these cases, the employer basically followed conventional wisdom when implementing a constructive dismissal,” says MacLeod. “There is no way the employer in each case could have predicted that the court was going to introduce a new legal requirement.”
MacLeod says, “Employment lawyers are now aware of these new requirements,” but the employers in the two cases “paid the price” of not knowing a legal obligation that did not exist at the time the employees were constructively dismissed.
In the more recent decision in Farwell, MacLeod says a sympathetic plaintiff may have played a role in the outcome.
“This guy was 58-years-old with more than 30 years of service … if this were a straight termination case it would likely have been a discussion of whether he should have received 21 or 24 months’ notice of termination. In a constructive dismissal case however he would have received 0 or 21 to 24 months’ notice,” he says. “I think there are cases where the court looks at a sympathetic plaintiff and does what it can to help the plaintiff despite the current state of the law. This may have been one of those cases.”
MacLeod, who represents employers and employees, says the decisions bode well from an employee perspective, but overall, they make the job of counseling employee and employer clients more difficult.
“I think the courts should try to minimize the legal uncertainty that exists around these issues – particularly in constructive dismissal situations – so lawyers can tell their clients with some degree of certainty, ‘If you do this, this will happen,’” says MacLeod. “In both of these decisions, the OCA introduced requirements that no one nobody could have predicted.”
