Is dismissal without cause — and its notice obligations — better than moving an employee around and risking constructive dismissal?
By Jeffrey R. Smith
There’s some dispute over what constitutes constructive dismissal. Even the idea of constructive dismissal can be tricky — it essentially means an employer has unilaterally made fundamental changes to an employee’s job or work environment to the point where the employee can no longer work there. Though the actual termination of employment is usually done by the employee, it’s treated as if done by the employer since the latter’s actions left the employee with no real choice.
Sometimes, it can be uncertain as to what’s constructive dismissal and what are circumstances an employee simply doesn’t like. Employers will argue they have the right to run their businesses as they see fit and exercise control over their employees — and they would be correct. However, as in other aspects of employment law, it can come down to what’s fair and reasonable to employees. A constant element of Canadian employment law is the recognition that employers generally hold most of the power in the employment relationship and if they abuse that power, they’ll face legal trouble.
Making a fundamental change to an employee’s role generally must come with considerations — such as a raise — or else the employee must be dismissed with reasonable notice. Such a change without consideration can be considered constructive dismissal, leaving the employer on the hook for reasonable notice the same as if it outright terminated the employee.
There have been cases of an employee claiming constructive dismissal but losing when a court found the changes were within the employer’s right to make decisions and were reasonable expected. On the other side, there have been many cases where an employer may have thought it was within its right but went too far with its changes, leaving the employee in a tough situation. Close attention must be paid whenever significant changes are made to an employee’s circumstances.
A recent Ontario decision — Morgan v. Vitran Express Canada Inc., 2013 CarswellOnt 1591 (Ont. S.C.J.) — highlighted an extreme situation that makes one wonder what the employer thought it was doing. An employee in a supervisory position was given a skill and personality test by the employer and, based on the test results, the employer determined the employee wasn’t a right fit for such a position.
A new position was created for the employee with the same salary but lesser responsibilities. The problem was, the employee had been in the supervisory position for 24 years, enjoyed his job, and had good performance reviews for the most part. It was only in the previous couple of years — when a new manager came in — that the employee had been told there were problems, and even then no specific issues or improvement plans were given to him.
A court upheld the employee’s constructive dismissal claim, finding the assessment of the employee’s abilities was unfair and didn’t make sense, given his time in the position. It found the employee had been targeted and it wasn’t reasonable to expect the employee to accept what was essentially an embarrassing demotion without any other consideration. The employer was ordered to pay 18 months’ notice for constructive dismissal.
While employers need to have some leeway in running their business as they see fit, they must recognize employees have legal rights and it’s difficult to do anything unilaterally without some consideration for employees. If the employer feels an employee isn’t a good fit, it must consider the effect of making a major change on the employee. The employer is under no obligation to keep the employee around if the employee isn’t working out in her current position — but it must provide reasonable notice of dismissal. At least in that case, the employer could then find the right person for the job.
Sometimes outright dismissal without cause and its associated legal obligations may be easier than risking constructive dismissal.
Jeffrey R. Smith is the editor of Canadian Employment Law Today, a publication that looks at workplace law from a business perspective. He can be reached at firstname.lastname@example.org or visit www.employmentlawtoday.com for more information.