Employee awarded 14 months’ notice after demotion but employer’s actions not deserving of extra punishment
A British Columbia employer constructively dismissed an employee who was given a lower position after it took over the employee’s former employer, the Alberta Court of Appeal has ruled. However, the employer’s actions were not inappropriate or egregious enough to warrant punitive damages.
Eric Sifton, 51, was hired as a technician by Tom Harris Chevrolet Cadillac (Harris GM) of Nanaimo, B.C., in 1993. He was later promoted to the position of shop foreman/manager in 1998, when he took on the responsibilities of training and supervising other technicians, along with still doing some technician work himself.
During his employment with Harris GM, Sifton was recognized as a top technician nationally and was considered a good employee by the dealership. He didn’t have any discipline or performance issues.
Financial difficulties led to pay cuts
In 2008, Harris GM began experiencing financial difficulties as the economy went into a recession. A number of the dealership’s employees, including Sifton, accepted voluntary wage reductions to ensure the business would continue operating. Sifton agreed to cut his annual salary from $78,000 to $60,000. There was no time limit for the cuts but everyone understood that wages would be returned to their original levels if and when Harris GM’s finances returned to normal.
However, the dealership’s struggles continued into 2009 and it was sold to Wheaton Pontiac Buick, a competing dealership. As part of the sale agreement, Harris GM would terminate all its employees and Wheaten would rehire them under “similar terms and conditions.”
But when Wheaten took over the Harris GM dealership in May 2009, the manager told Sifton there was no shop foreman/manager position available. Sifton agreed to work as a technician at Wheaton’s regular technician salary plus an extra one dollar per hour to perform team leader duties.
After a few days, Sifton found he didn’t like the arrangement under Wheaton and told his manager he wasn’t happy with his new position and pay. The manager said he wouldn’t tolerate negativity and Sifton’s employment terms were non-negotiable. Sifton didn’t like this treatment and there was tension between them following the discussion.
A month later, in June 2009, Sifton sought legal advice while on a week-long vacation. He then told Wheaton his considered himself to have been constructively dismissed and didn’t return to work. He looked for supervisory positions in the auto industry and elsewhere but couldn’t find any. He was offered technician positions, including one at another Wheaton dealership, but turned them down.
Changes in pay, position not covered in employment contract: Court
The British Columbia Supreme Court found the reduction in pay, the move back to a technician position and the loss of his shop foreman/manager position were fundamental changes to his employment contract. Though Wheaton pointed out Sifton’s original 1999 employment contract with Harris GM for the shop foreman/manager position stipulated if either party felt the position “is not being properly served,” then Sifton would return to a technician position, the court found this amounted to a probationary period which was long over after 11 years. Without Sifton’s approval, the changes constituted constructive dismissal and he was entitled to 14 months’ pay in lieu of notice, equal to $83,748, said the court.
The court also found Sifton adequately tried to mitigate his damages through job searching and networking, but wasn’t required to accept a non-supervisory position in the short-term. It dismissed Sifton’s claims for aggravated and punitive damages.
Both sides appealed the decision, with Wheaton arguing it had not constructively dismissed Sifton, but rather he left his employment of his own accord. Sifton argued his notice period should have been longer due to the tough economic circumstances and he should have been awarded punitive damages.
The B.C. Court of Appeal found it was reasonable for Sifton to have left his employment because “he did not want to be deemed to have accepted the changed position” and wanted to make it clear he believed it to be a constructive dismissal. It found no reason to change the trial court’s finding of constructive dismissal and that Sifton adequately tried to mitigate his losses.
