Archive for constructive dismissal
Ads to replace not yet terminated employees…How about no?
Posted by: | CommentsI was recently asked by a employer whether or not they can post ad ad for a job on workoplis.com before they terminated their employee. What a loaded question. The answer is well, obviously no, especially in his case, because they were not going to allege cause. In this post I refer to a case called Patterson v. Lee Munroe Chevrolet. This is a case where there was a communication breakdown that began with the employer posting an advertisement…and the plaintiff finding it. The situation led Judge Kent noted in this case that a lack of communication between the plaintiff and the defendant apparently destroyed their employment relationship. The plaintiff claimed that the defendant wrongfully terminated the employment relationship and sought damages resulting from the termination. The issue in the case was whether or not the plaintiff was constructively dismissed. The evidence was fairly straightforward. The plaintiff started work in January of 1995 as the service manager and his final day was May 23, 2006. During the afternoon of 23 May, 2006 the plaintiff attended a management meeting. He finished the day at approximately 7:00 p.m. after a training session with a service advisor.
The following day, the plaintiff’s spouse, Tracy Patterson, telephoned Lee Munro Chevrolet Ltd. on 24 May, 2006 at approximately 8:15 a.m. and advised a co-worker of the plaintiff, that he was not well and that he would not be in to work that day.
Later on 24 May, 2006 the plaintiff’s spouse again phoned and advised Debra Beaumont that the plaintiff would not be in to work on May 25 and probably not on May 26 either. She advised that the Plaintiff was not feeling well. Surprisingly, at no later than 4:00 p.m. on 25 May, 2006 Lee Munro, the dealer principal of Lee Munro Chevrolet Ltd. arranged for an advertisement to run in the Hamilton Spectator for the position of service manager. The plaintiff’s spouse on attended at the premises of the defendant and confrontation Lee Munro. The next day the Plaintiff’s spouse attended at the premises of the defendant and a further confrontation ensued when she attempted to leave a note from a doctor that the plaintiff had seen on May 25th. Later on May 26th Tracy Patterson sent that note dated May 25, 2006 to the defendant via fax. There was never any written or oral resignation communicated by the plaintiff to the defendant or vice-versa. The advertisement had a very hurtful and emotional effect on the Plaintiff. Someone brought the advertisement to the plaintiff’s attention on the day it was published, 27 May, 2006. The plaintiff noted that “he was shattered”, “he was no longer welcome” “he felt no longer wanted” and “he didn’t want to speak to anyone at Lee Munro”. Tracy Patterson described her spouse upon reading the advertisement as confused, upset, hurt and betrayed.
THE DEFENDANT’S ARGUMENT
Lee Munro testified. He agreed that although advertising the position of an employee off sick for just 3 days would ordinarily be disruptive to that employee’s existence, he did not believe that would have been the case with the plaintiff. The approach of Lee Munro was intersting. He had come to believe that the absence had been pre-meditated as part of a scheme for making a claim or claims of wrongful dismissal and/or disability and that Franklyn Patterson would not be returning to work. He felt that the plaintiff’s claim of illness was not credible. He was pushed toward his belief by the information that he had acquired about Tracy Patterson’s situation. He had heard that Tracy Patterson received long-term disability payments. Tracy Patterson confirmed, when she testified, that she was receiving long-term disability and was also n receipt of a Canada Pension Plan Disability Pension. Lee Munro testified that he had concluded that Tracy Patterson was a “schemer” who wanted her husband out of his job and on to a disability plan that had recently been initiated by the defendant.
Judge Kent held that Lee Munro was an impressive and apparently credible witness and this court is prepared to accept that his belief was genuinely held. But,unfortunately for him, Munroe’s testimony was supported by evidence. His theory was based upon speculation, gossip and water-cooler conversation.
THE EFFECT OF THE TERMNATION ON THE PLAINTIFF
The devastation felt by the plaintiff is clear from his own evidence and to some extent corroborated by the doctor’s notes provided in exhibit. The plaintiff received employment insurance sick benefits for a 17 week period. He saw a psychologist for a period of 6 to 9 months and was prescribed medication for depression, anxiety and sleep difficulties. Based on the foregoing evidence, this court found that the plaintiff was genuinely ill and unable to work at the relevant period of time. The defendant replaced him on or about 21 June 2006 and on 23 June 2006 the plaintiff’s counsel wrote to the defendant setting out the plaintiff’s claim.
THE CONSTRUCTIVE DISMISSAL
An employer owes a duty to its employees to treat them fairly, with civility, decency, respect and dignity. The Judge noted that there are situations when an employer, although not intending to change the employment contract, creates a situation in which it is untenable for an employee to continue in the employment relationship. Such conduct on the part of an employer can properly be regarded as constructive dismissal of the employee.
Specifically, he noted that “An employer who subjects employees to treatment that renders competent performance of their work impossible, or continued employment intolerable, exposes itself to an action for constructive dismissal. Where the employer’s treatment of the employee is of sufficient severity and effect it will be characterized as an unjustified repudiation of the employment contract. Whether such treatment is viewed as a breach of a specified fundamental implied term of the employment relationship or as a repudiation of the entire employment relationship the result is the same. The employee is entitled to treat the employment contract as at an end, and to recover, at least, damages in lieu of reasonable notice.”
WHAT ABOUT THE ADVERTISEMENT?
With respect to the advertisement, the Judge noted the case of Tolman v. Gearmatic Company, where it was found that an employer who posted a notice that an employee had resigned was found to have constructively dismissed that employee. Judge kent noted that “Lee Munro may not have anticipated that advertising Franklyn Patterson’s service manager position as he did would create a situation which would be untenable for the plaintiff. After the fact correspondence concerning “an equivalent position at similar compensation” is capable of supporting that state of mind and anticipation. Viewed Ojectively, however, the Judge was driven to the inescapable conclusion that the placing of the advertisement for the position without providing any explanation or even informing the plaintiff that it would be published was conduct rendering the continuation of Franklyn Patterson’s employment untenable. At that point, the plaintiff was constructively dismissed by the defendant.”
THE DEFENDANT TRIED TO ARGUE CAUSE:
Counsel for the defendant articulated a number of grounds that he submits, as an alterative, were cause for dismissal in any event. These include: a) performance issues; b) insubordination; c) not indicating a return to employment date; d) not responding to an offer of an equivalent position, and e) commencing this action for unlawful termination. Non of the above were supported by evidence. The performance and insubordination issues are all arguable on the evidence and would not support a finding of cause in any event, even cumulatively.
DAMAGES:
Counsel for the plaintiff submited that as an employee in a management position for more than 11 1/3 years the plaintiff should receive 12 months pay in lieu
of notice. Counsel for the defendant counters that the correct period should be 11 months. Because, as has often been said, fixing the notice period is as much an art as it is a science, it is hard to argue with either counsel’s position. Judge Kent split it at 11 ½ months.
The plaintiff’s damages were therefore:
a) salary, 11.5 x $2,816.66 = $32,391.59.
b) commission 11.5 x $3,250.00 = $37,375.00;
c) deduct adjustment 11.5 x $134.06 – $1541.69;
d) deduct indebtedness – $527.22;
Total $67,697.68.
Avoiding a Constructive Dismissal Lawsuit
Posted by: | CommentsFor an employee, a constructive dismissal is very hard to prove. For an employer, a constructive dismissal case can be an expensive litigation disaster. The Supreme court set out in Farber vs. Royal Trust Company that a Constructive dismissal occurs when an employer substantially alters, without an employee’s consent, an essential term of the employee’s contract of employment. An objective assessment of the employer’s action is required. .
How does a Court look at whether an employee has been constructively dismissed?
To reach a conclusion that an employee has been constructively dismissed, the courts must determine whether the unilateral changed imposed by the employer substantially altered the essential terms of the employee’s contract of employment. For this purpose, a judge must ask whether, at the time the offer was made, a reasonable person in the same situation as the employee would have felt the essential terms of their employment contract were substantially altered. The fact that an employee may have prepared to accept some of the changed is not conclusive, because there might be other reasons for the employee willingness to accept less then what she or he would have been entitled to.
Therefore, what we do as lawyers is analyze whether a particular employer initiated change amounts to constructive dismissal by a three part test:
1. we must determine the terms of the contract between the parties (which may or may not be a hard copy contract, or good be an oral agreement);
2. we try and determine whether the employer has breached any of these terms; and
3. determine whether the breach is a fundamental one, entitling the employee to consider that his contract has been repudiated or severed.
What changes therefore amount to constructive dismissal?
Changes that go to the root of the contract are fundamental changes are changes. For example:
A. changes in remuneration, remuneration is at the heart of the bargin between your company and your employees. Most reductions and salary will amount to constructive dismissal. In Farber vs Royal. Trust , constructive dismissal occurred when the basis of the plaintiff’s remuneration from a combination of salary + commissions to strictly commission amounted to a constructive dismissal. An employer must be very careful because in most incidents, changes to an employee salary, including alteration of the basis for calculating remuneration will amount to constructive dismissal. Do not do this without consulting a lawyer.
B. changes to benefits, where payments under a bonus plan is discretionary, alterations to the bonus entitlement have been found not to amount to an alteration to a fundamental term of the contract. On the other hand amendments to non discretionary bonus plans (which mean a decrease in the employee’s bonus entitlement) are often treated the same way as alterations to salary. In most instances such alterations will constitute constructive dismissal, excluding minor changes to benefit plans that are not a significant. In essence, significant changes to benefits or remuneration are likely to be viewed as fundamental.
C. changes in your employee work hours – a slight variations in hours are permissible, unless is could be inferred that the parties had agreed to particular working hours. In the case of Laakso vs, valspar the plaintiff was transferred from dayshift to shift work. The plaintiff was medically incapable of working nights and in these circumstances the unilateral change in hours was found to constitute constructive dismissal.
D. changes in work locations – until recently the Ontario case law supported a conclusion that relatively senior employees and large organizations were required to accept transfers in locations. However several years ago in the court of appeal case of Reynolds vs. Innopac Inc., as a result of a corporate reorganization, the plaintiff, a director of human resources, was required to relocate from South Western Ontario to Vancouver. The court found that this would have necessitated increase travel for the plaintiff as he would have been required to service plants in South western Ontario. His duties also might have been altered slightly in Vancouver. When he was originally hired the plaintiff was required to travel only in Ontario as the employer had no operation else where. The trial judge found that there was no constructive dismissal arising from this relocation request; however this decision was overjourned by the court of appeal who found that the relocation requirement amounted to a fundamental change entitling the plaintiff to a two year payment provided in his golden parachute termination clause. This decision is not confined to its particular facts it significantly alters the impact of relocation requests.
E. changes in job status – the courts have long decided that job reassignment amounting to any type demotion would constitute a constructive dismissal. The courts also have recently undercut management rights to affect lateral transfers. Now dispite nothing inheriting demeaning about lateral work transfers being offered or remuneration packages had to be unchanged, the court of appeal has held that lateral changes do constitute a breech of employment agreement and damages have been awarded for this unilateral breech.
F. a difficult work environments or humiliating treatments, or bulling – this is an area that must be addressed immediately and brought to an employer’s attention. There should be no instances of harassments tolerated in a work place and any criticisms, dishonesty, assault or bulling, humiliating treatment or insult must be properly addressed by management without delay. A seminal case in this area is Shah vs. Xerox Canada limited. In this case the plaintiff had received several good performances evaluations. He was a good employee who always arrived on time and did his work dutifully. A new manager was hired and soon he and that new manager developed personality conflicts between each other. The manager criticized him for minor matters and that plaintiff immediately addressed the issues raised but non the less reserved stern warnings. The plaintiff soon became ill and took time off and when his relations with his manager deteriorate further the plaintiff was assigned to several new tasks. These tasks were, as the plaintiff put old tasks that others have failed to accomplish. The plaintiff that therefore felt that deadlines listed on the forms was unreasonable. He then received more stern warnings. The plaintiff ended taking a stress leave; he returned to work and then was placed on probation to failing to properly call in sick one day. Upon receiving another letter placing him on probation the plaintiff resigned and claimed he was constructively dismissed. The court of appeal noted in this case where “where the conduct of management personnel is calculated the cause the employee to with draw from the employment it may amount to constructive dismissal”. The test is objective. It is whether the conduct of the manager was such a reasonable person in those same circumstances should not be expected to persevere in the employment. Each case must be decided on its on facts and this test of the reasonable person should not be applied lightly. An employer is entitled to be critical of the unsatisfactory work of its employees and take measures, such as disciplinary measures or other measures it believes to be appropriate to remedy the situation. However there is a limit and if the employers conduct in the particular circumstances pass so far beyond the bounds of reasonableness, that the employee reasonably finds continued employment to be intolerable there will be constructive dismissal.
The court of appeal up held this approach and confirmed that constructive dismissal may occur through a series incidents such as repeated unfounded criticisms, which create a hostile embarrassing work environment. A fundamental breech of the terms of the employment contract may exist where their environment is rendered “intolerable”.
Conclusion
A company that is contemplating changes to an employees status, compensation, territory, work location, hours of work, changes to benefits should consider several factors in order to avoid an employee to convincing law suit in constructive dismissal. Firstly give proper notice of the change that your company intends to make. Any employment contract can be terminated with cause or reasonable notice. If an employee has received written notice of the projected changes and that employee refuses to accept changes her or she may not be entitled to claim a constructive dismissal. In the case of Fellowes-strike vs. Co-operators group limited it was held that an employer is impliedly entitled under the employment contract to unilaterally change an employees job duties as long as it gives the employee reasonable notice. Therefore you should firstly determine what the reasonable notice would be before you give notice of the purposed change to your employees working conditions. If you provided proper notice of the change an employee is then obligated to look at the new position offered and evaluated as a means of medicating damages. Generally however the courts of applied this quiet narrowly, therefore it is important that you contact proper counsel to examine written notice of the purposed changed.
Constructive Dismissal claims are also less likely to succeed if the company was undergoing restructuring or reorganization of the company. An employer is entitled to protect its own interests and if an employer has to realign employee responsibilities their position to protect its own financial interests and conditions than that company will most likely be aloud to do so. Also, it is important to draft proper agreements of employment when the company hires an employee. If you are employment contracts or particularly guarded to anticipate any sort of changes allowed by contract then it is most likely that those changes will be allowed.
I often advise employers that it is important employee as informed as possible through management. The worse thing an employer can do is keep an employee in the dark concerning any projected changes that maybe made. An employer should properly consult with counsel with respect to any fundamental changes that maybe incorporated into the employment relationship and properly plan for those changes. There is a duty both on the employer and employee to remain within the sculpt of the employment agreement, and therefore changes outside the perimeter of this contract are often not welcome. However, if these changes are approached carefully and with precision (outside the obvious reasons of reorganization or restructuring or merger) then those changes could be dealt with outside any possible commencement of litigation. An employer will often see that if it approaches any fundamental changes of the sculpt of the employment contract with a caring concern for the employee, it will be much easier to deal with those changes and more often than not an employer will receive the employees consent.
If you are an employer that requires to unilaterally change the fundamentally scope of an employment contract or employment relationship and need proper consultation please do not hesitate to contact Matt Lalande at 905-639-8894.
If you are an employee that believes that your contract or employment that has been substantially changed without your consent and you do not agree with such change please do not hesitate to contact Matt Lalande at 905-693-8894.
Matt Lalande
Haber & Associates
905-639-8894
www.haber-lawyer.com
