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Constructive dismissal of executive suffering from cancer costly

Quebec court orders IBM to pay $300,000 in punitive damages to worker

By Stuart Rudner

A recent decision of the Quebec Superior Court provides a good example of circumstances that will be found to 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 that had been recruited away from his own company to work with IBM. In 2006, Leslie Keating became Chalifour’s new superior, and the two had a discussion in which Keating assured Chalifour she wanted him to remain on her team for a long time.

However, later that year there was an incident in which Chalifour was unable to attend a meeting as he had to attend a client meeting in Alberta. He briefed others, but this was unacceptable to 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 him 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 to him, and began looking for other positions within 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. When he did not return to work, IBM advised him he was deemed to have resigned.

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, Chalifour was awarded an additional $35,000 in moral damages. Finally, the court, in order to express its outrage at the conduct of IBM, 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 their compensation would be unless they accept the new position, and to effectively attempt to make their life as miserable as possible in the hope they resign.

This is even more egregious when the individual in question has cancer. It is not surprising the court found Chalifour had been constructively dismissed, and also that 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, in the post-Honda days.

Stuart Rudner is a partner with Miller Thomson LLP in Ontario, specializing in employment law. He provides clients with strategic advice regarding all aspects of the employment relationship, and represents them before courts, mediators and tribunals. He is author of You’re Fired: Just Cause for Dismissal in Canada, published by Carswell. 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+.


Stuart Rudner

Stuart Rudner, Employment Lawyer and MediatorStuart Rudner is the founder of Rudner Law (RudnerLaw.ca), a firm specializing in Employment Law and Mediation. He can be reached at stuart@rudnerlaw.ca, (416) 864-8500 or (905) 209-6999, and you can follow on Twitter @RudnerLaw.
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