Can we promote and then demote?

Risk of constructive dismissal claim after moving employee back to original position
By Colin Gibson
|Canadian HR Reporter|Last Updated: 05/31/2018

Question: Can an employer promote an employee, then later move the employee back to her old position in a restructuring while maintaining her pay level from the promotion?

Answer: An employer that promotes a non-union employee and later moves the employee back to a former position in a restructuring may be faced with a claim of constructive dismissal, even if the employee’s pay level is maintained.

At common law, a constructive dismissal occurs where an employer makes substantial changes to the essential terms of an employee’s contract of employment and the employee does not agree to the changes: Farber c. Royal Trust Co.

Similarly, employment standards legislation may provide employees with statutory protection from constructive dismissal.

For example, the British Columbia Employment Standards Act states: “If a condition of employment is substantially altered, the director may determine that the employment of an employee has been terminated.”

The determination of whether there has been a substantial alteration to employment depends on the nature and degree of the changes. For example, if the move back to a former position is a significant demotion or would cause humiliation, it is more likely that a constructive dismissal will be found.

Other substantial alterations could include changes in geographic location, working conditions or responsibilities.

In Evans v. Teamsters, Local 31, the Supreme Court of Canada ruled that there are circumstances where an employee is required to return to work for the same employer to mitigate his damages following a constructive dismissal. This requirement to accept re-employment is based on several factors that assess whether the breach of the terms of employment was such that continuing with the employer would be unreasonable.

Given the Evans factors, there may be circumstances where an employee must accept a move back to her former position due to the obligation to mitigate damages. Also, courts may allow an employer some leniency where an employee’s position is changed as part of a bona fide restructuring arising from economic circumstances.

In a unionized environment, the ability to move an employee back to his former position will depend on the collective agreement — perhaps allowing for a trial period following a promotion, where the employer is permitted to return the employee to the former position if the trial is unsuccessful and there would be no obligation to maintain the employee’s higher rate of pay unless required.

If the collective agreement does not provide for a trial period, or if the trial period has expired, the agreement is likely to contain provisions that dictate what the employer must do in a restructuring situation.

For more information, see:

Farber c. Royal Trust Co., 1996 CarswellQue 1159 (S.C.C.).

Evans v. Teamsters, Local 31, 2008 CarswellYukon 22 (S.C.C.).

Colin Gibson is a partner at Harris and Company in Vancouver. He can be reached at (604) 891-2212 or cgibson@harrisco.com.

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