The relitigation of names

How much change to a job constitutes constructive dismissal?

The relitigation of names
Geoffrey Lowe

In the recent case of Tonkin v. Paris Kitchens, 2022 ONSC 749, the court was once again confronted with the task of determining how much change to a job would constitute a constructive dismissal.

On April 1, 2022, the Court of Appeal for Ontario will hear arguments in another constructive dismissal matter, Taylor v. Hanley Hospitality Inc., 2021 ONSC 3135

With this in mind, it is an optimal time for a brief review of the law behind constructive dismissal.

A constructive dismissal happens where the employer changes the essential terms and conditions of employment to the extent that it is no longer the same job for which they were hired (or had subsequently agreed to). The employee may claim that the employer has constructively dismissed them and seek recourse, which may include the employer being required to pay the employee their entitlement to reasonable notice of termination. 

Two-branch test

The Supreme Court of Canada reiterated the two-branch test for constructive dismissal in

Potter v. New Brunswick Legal Aid Services Commission, 2015 SCC 10, as follows:

  1. The court must determine objectively whether a breach has occurred. To do so, it must ascertain whether the employer has unilaterally changed the contract. If an express or an implied term gives the employer the authority to make the change, or if the employee consents to or acquiesces in it, the change is not a unilateral act and therefore will not constitute a breach. If so, it does not amount to constructive dismissal. Moreover, to qualify as a breach, the change must be detrimental to the employee.
  2. Ask whether, “at the time the [breach occurred], a reasonable person in the same situation as the employee would have felt that the essential terms of the employment contract were being substantially changed.”

A fundamental tenet of the working relationship is the exchange between the parties — the employee provides their labour, the employer provides the employee with the opportunity to provide this labour and compensation in exchange for doing so.

In normal circumstances, when the employer ceases to provide the employee with the opportunity to work and earn, the employer has constructively dismissed the employee. The Employment Standards Act, 2000 includes provisions which permit an employer to reduce an employee’s hours of work for a period without constructively dismissing the employee (a “layoff”).

Without a term in the employment contract permitting the employer to place an employee on layoff, however, this would be a constructive dismissal.

However, early in the pandemic, the government of Ontario implemented the Infectious Disease Emergency Leave (IDEL), which permitted an employer to temporarily reduce an employee’s hours of work or income without this being a constructive dismissal for purposes of the act. Shortly after implementing IDEL, the government of Ontario issued a bulletin which indicated its position that IDEL was not intended to change the common law — only the act. 

Several cases have been brought challenging whether the IDEL is a constructive dismissal for purposes of the common law — you can read about these here and here. In two cases, the court has found an employee placed on IDEL was constructively dismissed for purposes of the common law.

In the third, Taylor, the court found the opposite, and held that an employee placed on IDEL was not constructively dismissed. The Court of Appeal for Ontario has agreed to hear arguments in Taylor on April 1, 2022. There does not appear to have been any further litigation regarding the IDEL since everyone, it appears, is waiting for the Court of Appeal to weigh in on Taylor.

Tonkin v. Paris Kitchens

This does not mean that litigation regarding constructive dismissal has stopped or even slowed: the court continues to consider the text of changes to an employment relationship required to constitute a constructive dismissal — Tonkin is an example.

In Tonkin, the employee was hired in 2013 and initially given the title of regional sales manager. The reality of this role was that the entirety of his duties were project management: he did no sales. In 2019, in what appears to have been an attempt to supplement its sales capacity, the employer posted a job advertisement for the role of business development representative.

The employee claimed this job advertisement was a demotion, and that by posting the advertisement, his employer had removed his sales capacity and “downgraded” him to project manager.

No job title change took place — or even a discussion of a change: the employee inferred that he would be “downgraded” to the position of project manager once the employer’s new business development representative came onboard. The employee, having come to this conclusion on his own, walked off the job, claiming the employer’s actions were a demotion and he had been constructively dismissed. The then-67-year-old employee sued, asserting constructive dismissal and seeking 24 months of reasonable notice. 

At trial, the employer presented evidence that it had made no change to the employee’s job, and that he had always been a project manager. The employer gave further evidence that the employee was highly valued for his contribution to its business, and that it had made repeated attempts to get him to stay, to no avail. 

A trial between May 11 and 14, 2021 resulted in a 27-paragraph judgment. In it, Justice Gibson found for the employer, noting that the employee had not shown any change to the terms and conditions of employment, apart from “the title, which was a chimera that only he understood to be in effect, everything would have continued as before.”
n Tonkin the court confirmed that there needs to be a substantial change to the position in order for this to constitute constructive dismissal.

In short: what's in a name? Apparently, it is not always a fundamental term or condition of employment, particularly when any change to a title is inferred and not explicitly stated.

We will be monitoring the Court of Appeal’s hearing of Taylor closely. Watch this space in early May for a review of the outcome and our thoughts on the decision.

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