IBM’s constructive dismissal of executive suffering from cancer expensive mistake (Guest Commentary)

Quebec court orders company to pay $300,000 in punitive damages to worker
By Stuart Rudner
|Canadian HR Reporter|Last Updated: 05/23/2012

A recent decision of the Quebec Superior Court provides a good example of circumstances that constitute a constructive dismissal and also warrant substantial punitive and moral damages.

In Chalifour v. IBM Canada Limited, Denis Chalifour was a fairly senior executive who was recruited by IBM. In 2006, Leslie Keating became Chalifour’s superior and the two had a discussion in which she assured Chalifour she wanted him on her team for a long time.

Later that year, Chalifour was unable to attend a meeting as he had to attend a client meeting in Alberta. While he briefed others about this, it was considered unacceptable by Keating.

After that time, Keating’s attitude toward Chalifour changed dramatically and she suggested moving him to an account that was of significantly less importance than his current portfolio.

Soon thereafter, Chalifour was diagnosed with bladder cancer. In total, he missed 20 days of work.

Not long after he returned, Keating advised Chalifour he was going to be removed from his position and transferred to an administrative job without accounts or clients to manage. When he refused, Keating prepared a negative performance review of Chalifour.

He later asked for more details of the proposed new position, such as the compensation plan, though he was clear to say he was not accepting it at that point.

In response, he was told he would have to accept the job before that question was answered.

Chalifour refused the position Keating offered and began looking for other positions at the organization. He also, on the advice of his doctor, went on medical leave.

He was subsequently advised Manulife (the insurer) had rejected his application for disability benefits and he could return to work or appeal that decision. And when he did not return to work, IBM deemed he had resigned.

But the Quebec Superior Court found Chalifour had been constructively dismissed and awarded him pay in lieu of notice of 24 months. In addition, due to the bad faith conduct of IBM, he was awarded an additional $35,000 in moral damages.

Finally, in order to express its outrage at the conduct of IBM, the court awarded an additional $300,000 in punitive damages.

The lessons to be learned from this case should probably go without saying. It is almost never advisable to unilaterally demote an executive to a vastly inferior position, to refuse to advise as to what his compensation would be unless he accepts the new position, and to effectively attempt to make his life as miserable as possible in the hope he resigns.

This is even more egregious when the individual in question has cancer. It is not surprising the court found Chalifour had been constructively dismissed. It’s also not surprising the court sought to punish IBM with a substantial award of punitive damages, in addition to an award of moral damages.

This is a good example of the type of circumstances that can be used to justify an award of “the damages formerly known as Wallace” (extensions of the reasonable notice period awarded to a wrongfully dismissed employee when her employer acts in egregious bad faith) in the post-Honda Canada Inc. v. Keays days.

Stuart Rudner is a partner at law firm Miller Thomson in Markham, Ont., specializing in employment law. He is author of You’re Fired: Just Cause for Dismissal in Canada, published by Carswell, and writes a weekly blog for Canadian HR Reporter. He can be reached at (905) 415-6767 or srudner@millerthomson.com. You can also follow him on Twitter @CanadianHRLaw, join his Canadian Employment Law Group on LinkedIn and connect with him on Google+.

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