Constructive dismissal describes a situation where an employer makes a significant and fundamental change to the working relationship allowing the employee to leave the workplace and claim damages.
It’s not always clear in constructive dismissal situations whether an employee is obliged to remain at their employment while searching for other employment opportunities. Legally, where the new role is demeaning, humiliating, or embarrassing a worker is entitled to leave. This, however, is examined from an objective or “reasonable person” standpoint. In Mifsud v. MacMillan Bathurst Inc. the Supreme Court of Canada indicated where, “the salary offered is the same, where the working conditions are not substantially different or the work demeaning, and where the personal relationships are not acrimonious” the employee must stay at the workplace.
Constructive dismissal was recently addressed in Bannon v. Schaeffler Canada Inc. The Ontario Superior Court of Justice reviewed an employment agreement of a longstanding forty-one year employee finding that the employer changed the employee’s terms of employment by eliminating his job and offering him continued employment at $3.39 less per hour. Mr. Bannon was faced with three choices:
- He could accept the new position at a reduced hourly rate.
- He could accept the new position but sue for damages resulting in the reduction of his hourly rate.
- He could reject the new job offer and sue for wrongful dismissal.
The employee refused the job offer and argued it was over ten years since he performed the reduced position. While his relationship with the employer was not acrimonious, given his physical limitations (he considered himself overweight and he had back problems associated with standing) along with the work requirement (he was required to lift items up to 50 pounds and would be on his feet 4- 6 hours daily), he was entitled to damages.
The Judge awarded Mr. Bannon twenty (20) months notice of the termination of his employment.
Bannon v. Schaeffler is a cautionary tale. Economic uncertainty does not negate an employees’ right to damages. When assessing the appropriate course of action to take Courts’ will look at the individual facts to decide whether a long-term employee is required to accept a new position.
