Fine line between suspension and constructive dismissal
Question: Can an employer suspend an non-union employee without pay as a form of discipline and not have it considered to be constructive dismissal?
Answer: The short answer to your question is “yes.” It is possible to suspend a non-union employee without pay as a form of discipline and not have it considered to be constructive dismissal, but only in certain circumstances. In most cases, there is a big difference between a unionized and a non-union workplace when it comes to the employer’s right to impose an unpaid disciplinary suspension.
Most employers who have a workforce which is at least partially unionized assume the employer has the right to suspend non-union workers without pay as a form of discipline, just as they do to unionized employees. However, this assumption is not always correct.
Traditionally, imposing an unpaid disciplinary suspension on a non-union employee has been regarded as a form of constructive dismissal. This was the case because the unpaid suspension constitutes a unilateral change to the fundamental terms of the employment contract. In other words, suspending an employee effectively denies the employee the right to perform her job and be paid for it. Since performance of the job and payment for that performance is a fundamental term of any employment contract, a disciplinary suspension amounts to a fundamental breach of the contract of employment. This has led to the general rule that an employer does not have the power to suspend a non-union employee without pay. Although the current case law still equates an unpaid suspension with constructive dismissal, courts have determined that in certain circumstances, an unpaid suspension is an appropriate form of discipline and does not constitute constructive dismissal.
Aside from suspension with pay, the most certain way to ensure a disciplinary suspension is not deemed to be constructive dismissal is to provide for it within the employment contract or the employer’s personnel policies. By including a paid or unpaid suspension provision within the employment agreement or within the company policy and procedure manual, an employer can ensure it is reserving its ability to suspension within its progressive disciplinary program.
Any provisions authorizing suspension should be presented to affected employees in clear and unequivocal terms as courts are reluctant to imply such a term into a contract unless it is necessarily inferred for the purposes of business efficacy. In addition, courts are apt to give a restrictive definition to terms in a contract favouring the employer, given it is likely at an advantage with respect to resources and bargaining power. Therefore, a corrective program that clearly states the progressive disciplinary action and the number of offences necessary to render the employee subject to the increasing levels of penalty will prove quite useful in the proper discipline and termination of employees.
The discipline policy, if utilized, must be applied consistently and uniformly across the workforce. If a progressive discipline plan is set out in the company policy manual or as part of the employment contract, but is generally ignored in practice, courts may not be inclined to permit an employer to rely upon it when it is challenged. Again, consistent application is the key.
In the absence of clear language in the employment agreement or policy manual, it is difficult to imply a right on the part of the employer to suspend employees without pay, even if such practices have been accepted by some employees in the past. Again, the inequality of bargaining power between employer and employee is taken into account. Lack of knowledge, or lack of resources, may have prevented some employees who were previously suspended from challenging the discipline.
However, there is an argument to be made that when corrective discipline is consistently and regularly applied to all employees, the right to impose a disciplinary suspension is implied into the employment contract on the basis of past practice.
Therefore, a non-union employer should not assume it has the right to impose an unpaid suspension as a form of discipline. Unless there is an express or implied term in the employment contract that contemplates this type of disciplinary sanction, it will likely be considered to amount to constructive dismissal. The most effective way in which to secure the right to impose unpaid disciplinary suspensions is to include it in the express provisions of an employment contract or discipline policy that is incorporated into an employment contract. While there are circumstances where courts will imply such a right, it is always preferable to state it explicitly and in writing. It is also very important to ensure any such policy is consistently applied by the employer.