Constructive dismissal occurs when an employer fails to meet the fundamental responsibilities of the work relationship to such an extent that an employee is entitled to regard the employer's conduct as a breach that goes to the root of the contract and claim constructive dismissal. We will look at some recent cases to get a sense of what the "winning formula" is.
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1. The Legal Test for Constructive Dismissal - A Quick Recap
As established in Potter v New Brunswick Legal Aid Services Commission, 2015 SCC 10, the Supreme Court of Canada stated that there are two branches for constructive dismissal claims, satisfying either one will suffice:
1) The employer unilaterally i) makes a substantial change ii) to a fundamental term of an employee’s employment agreement; or
2) The employer’s conducts over a period of time, taken as a whole, showcases that the employer does not wish to adhere to the contractual terms any longer.
Click here to learn more about the legal test for constructive dismissal.
2. Successful Constructive Dismissal Cases
What constitutes “a breach that goes to the root of the contract" is fact driven. So far we know that the following employer misconducts result in a successful constructive dismissal case:
(a) Demotion/Change in Responsibilities
Robinson v. H. J. Heinz Company of Canada LP, 2018 ONSC 3424
In Robinson v. H. J. Heinz Company of Canada LP, an employee who had worked for the same firm for approximately 16 years claimed constructive dismissal after a major corporate merger and restructuring resulted in significant changes in her job responsibilities. The changes included the elimination of payroll duties, a title change, the transfer of the accounts payable function, and a relocation that would double the employee's commute time.
The Court held that the employee was constructively dismissed. The court decided that the employer unilaterally changed the employee's work by eliminating several of the employee's job responsibilities, and that a reasonable person would not regard the changes as insignificant.
(b) Suspension Without Pay
Filice v. Complex Services Inc., 2018 ONCA 625
In Filice v. Complex Services Inc., the employee, a security shift supervisor at a casino, was suspended without pay as a consequence of a provincial gaming commission inquiry into inconsistencies in the resort's lost and found record. Evidence available suggested that the employer suspended the employee prematurely without conducting proper preliminary investigation.
The Ontario Court of Appeal determined that there was insufficient reason for a suspension without pay when the decision was made during the early phases of the inquiry, and that the employer unilaterally altered the work relationship and therefore breached an implied requirement of the employment contract of good faith and fair dealing that the power to suspend without pay would not be exercised arbitrarily.
The Court of Appeal ruled that suspending the employee without pay had such a severe impact that it was deemed a breach of contract and amounted to constructive dismissal.
(c) Employer’s Unilateral Change of Oral Promise
Hagholm v. Coreio Inc., 2018 ONCA 633
In Hagholm v. Coreio Inc., the employee was employed for roughly 22 years by the employer’s predecessor since 1982. After working for the employer’s predecessor for over 10 years, the employee relocated to somewhere 110 km away from the employer’s predecessor. The employee continued working for the employer’s predecessor in reliance to an oral agreement that she could work from home three days per week, and come into the office for the other two days. Employer acquired the employer’s predecessor roughly 10 years later. In January 2017 the employer advised the employee she could no longer work from home. The employer also changed the employee’s title, responsibilities, reporting requirements and bonus entitlement.
The Court of Appeal found that while there was nothing in writing between parties, it was clear the oral agreement allowing employee to work from home three days per week was, essentially, condition precedent to employment contract, and the fact that the employer had unilaterally breached the Contract ought to be constituted as constructive dismissal.
(d) Poisoned Work Environment
Colistro v. Tbaytel, 2019 ONCA 197
In Colistro v. Tbaytel, an employee who had worked for the business for almost two decades was enraged when she learned that her former supervisor, a Vice-President, would be rehired. Eleven years ago, the supervisor was dismissed for sexually harassing the employee and others.
The business offered to relocate the employee to a similar position in another building, but the employee declined and requested that the supervisor not be hired.
After being diagnosed with post-traumatic stress disorder (PTSD) and depression, the employee did not return to work.
The trial court awarded twelve months' notice as constructive dismissal damages and $100,000 in aggravated damages. The Employer appealed the decision.
The Court of Appeal decided that the employer's position, which was disrespectful, dismissive, re-victimized the employee, and minimized the previous supervisor's behaviour, was well-founded, as evident by its letter. The trial judge did not make a clear and overwhelming error in concluding that the employee's continued employment would be intolerable under the circumstances, where the employee was left with no choice but to resign as a result of the employer's breach of the implied contractual obligation to provide employees with a healthy and safe working environment.
(e) Temporary Layoff Without a Contractual Right
Gent v. Strone Inc., 2019 ONSC 155
In Gent v. Strone Inc., the employee, a 53-year-old Health & Safety Training Specialist who had been with the company for 23.5 years, was temporarily laid off when the company's business dropped significantly.
The Court ruled that there was no provision in the employee's employment contract that enabled the company to suspend him temporarily, and as such, the employee was constructively dismissed.
(f) Change to Remuneration
Crescent (1952) Limited v. Safety Insurance (1959) Limited, 2019 ONSC 931
In Crescent (1952) Limited v. Safety Insurance (1959) Limited, Jones Deslauriers Insurance Management Inc. (“JDIMI”), the owner of Safety, was accused of constructively dismissing two of Safety's salespeople, McIntyre and Skinner.
The Court found that JDIMI attempted to unilaterally change the terms of McIntyre's compensation package, which would very likely have resulted in a salary reduction. Under Skinner, the court used a similar reasoning to reach the conclusion that JDIMI's conduct amounted to constructive dismissal in the circumstances.
In this case, the Court sent a clear message that attempting to conceal a change in remuneration through a complex payment scheme probably isn't going to fly. Remuneration and salaries go to the core of any employment contract.
3. Conclusion
A case of constructive dismissal is technical and is heavily fact-driven. You shouldn't sign any new employment contract or agree to any contract amendments before consulting with an employment lawyer or you risk waiving your legal rights in suing for constructive dismissal.
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