'This is very much a case of longstanding workplace arrangements acquiring contractual force over time'
A British Columbia worker was constructively dismissed when her employer removed her longstanding flexible work arrangement and reclassified of her role to a lower one during a salary review, a BC court has ruled.
Cressey Construction Corporation is a real estate developer and construction company in Vancouver. The worker joined Cressey in 2005 as a development manager, with an unwritten employment contract with an indefinite term.
In 2012, the worker went on maternity leave. When she returned to work in 2013, Cressey agreed to grant her flexible working hours – four days per week - so she could meet her childcare commitments. Her boss, the vice-president of development, regularly approved her flexible work schedule after she emailed him with a number of hours she planned to work each week.
In April 2018, Cressey promoted the worker to director of marketing and promised her a salary increase, as management felt that the role would be a better fit for her flexible work schedule. However, she didn’t receive the raise and continued to inquire about it over the next few years. She believed she wasn’t given the increase because of her child-care needs being accommodated with flexible hours.
In March 2020, the worker started working at home full-time due to the pandemic and her hours increased to eight per day from Monday to Friday, although she was still being paid for 30 to 35 hours per week. After about eight weeks, most employees returned to the office. However, the worker asked to continue working from home and the vice-president of development “understood and said it was okay.”
Remote work arrangement confirmed
The worker’s boss left the company in 2021, so she reached out to a manager who had been her boss before her promotion to discuss her continuing to work from home. She said that one of her children had health concerns and the manager said that it didn’t matter where she worked, “as long as the job was getting done.”
In March 2023, the worker had a new boss and officially changed to full-time hours. She usually had to leave her home and pick up her children at 3 p.m. every workday, but she worked additional hours to make up the time.
On May 10, 2023, Cressey’s vice-president of development called the worker into a meeting, where he told her that she was to return to the office full-time as the owner had negative views of working from home. He also said her salary would be increased from $93,600 to $95,000 – it wasn’t more because he saw her position as more comparable to a marketing manager, not a director, as she didn’t supervise anyone. The worker had requested a salary of $130,000, which was comparable to marketing director roles at other companies in the industry.
The worker left work and eventually filed an action for constructive dismissal and breach of contract, citing the requirement to return to the office full-time, the failed promise of a pay raise, and an implied demotion as significant changes to her terms of employment. She claimed damages for 20 months’ notice and $50,000 in punitive damages.
The company maintained that the worker resigned from her employment and, if she was constructively dismissed, she didn’t mitigate her damages.
Employment contract
Trouble was potentially brewing for Cressey when it hired the worker without a written employment contract, says Scott Dallen, an employment lawyer at Ascent Employment Law in Vancouver.
“The importance of written contracts really can't be understated, particularly when you're dealing with longer-term employees and implied contractual terms,” he says. “What I think makes this case interesting is that this is very much a case of longstanding workplace arrangements acquiring contractual force over time, so things that ordinarily would not have contractual force on their own, like a flexible work arrangement, acquire that through consent or acquiescence over time by the employer.”
Even without a written contract at the start, there were opportunities to introduce one during the worker’s employment, adds Dallen.
“At some point down the line, particularly when you're giving someone a promotion or they're moving up the ladder in the organization, those are important opportunities to look at the contract and make sure there’s as little liability as possible moving forward,” he says. “Particularly when entering into an arrangement where the worker has considerable flexibility in how she does work – if [Cressey] wanted the ability to change that in the future, it needed to give itself the authority to do that, and it was the perfect opportunity to do it, as was when she was promoted to director of marketing.”
The court found that upon her return from maternity leave in 2013, the worker was granted a flexible work schedule to accommodate childcare commitments. This arrangement was continually acknowledged and supported by her supervisors, including after her promotion. As a result, the flexibility in hours and remote work became implied contractual terms, particularly since management was aware of these terms and continued to approve it over the years, said the court.
Implied terms of employment
“The long-term nature of the flexible work arrangements are really what hammered home this case for the worker,” says Dallen. “Even if she did have a written contract, if they are consenting to or acquiescing to flexible work arrangements over a long period of time, that can be adopted as an implied term of a contract over time, particularly where you're looking at a timeframe of 10-plus years - employers need to be really careful with what kind of practices they're allowing to take place over a long period of time.”
As for the worker’s role, she was promoted to director of marketing in 2018 and performed those duties, the court said. Although she didn’t receive a raise for five years, she had been promised one in recognition of her advancement, so there was little doubt that the company considered her the director of marketing, the court said, adding that trying to reassess her position to a lower one with a small pay increase was effectively a demotion.
The court determined that requiring the worker to work from the office full-time and the reassessment of her position to that of marketing manager constituted significant and unilateral changes to the essential terms of the worker’s employment contract that met the test for constructive dismissal – a unilateral change by the employer that breaches the employment contract and alters an essential term, or a course of conduct that shows the employer no longer intends to be bound by the contract terms.
As for the promised pay increase, the court found that “a promise to consider a pay raise is just that, and cannot be considered a binding term of employment.” This broken promise may have been poor treatment of the worker, but didn’t contribute to constructive dismissal, the court said – although it noted that the worker’s salary wasn’t commensurate with salaries typical of the position.
19 months’ reasonable notice
Citing the worker’s 18 years of service, age of 53 at the time of dismissal, and her director of marketing role, the court found that the worker was entitled to 19 months’ pay in lieu of notice. It also found the worker’s pursuit of entrepreneurial ventures following her dismissal – which it called “robust efforts with a potential of success” - rather than seeking comparable employment, to be reasonable mitigation efforts given her experience in development and marketing.
The court denied the worker’s claim for punitive damages, finding that while Cressey’s conduct was careless and dismissive, it didn’t meet the legal standard of malice or high-handedness required for punitive damages.
“The make-or-break point of this case is that the court determined that the employer had no authority under the contract to make the unilateral changes to longstanding working arrangements, particularly the flexibility of hours,” says Dallen. “If the employer had a term in their contract that says ‘We reserve the right to make reasonable changes to your employment,’ or ‘We require that your standard working location is the office notwithstanding any other working arrangements we may provide to you, and we reserve the right to recall you to the office’ - something as simple as that could have prevented this entire case, in my opinion.”
“It something that’s pretty easy to insert into an employment contract and give authority to the employer to make these changes.”
