Canadian Employment Law Today

Canadian Employment Law Today | 3 Cases and Trends Canadian HR Reporter, a Thomson Reuters business 2019 Employment law in the AI era: e constructive dismissal problem Changing roles due to automation without proper notice or preparation could create constructive dismissal liability BY MITCH FRAZER, LISA TALBOT, BRAD TARTICK, IRFAN KARA, AND PAT DENROCHE THE JULY 2, 1978 issue of the New York Times was the final one the paper sent to print under the linotype process. After decades of relying on Gutenburg print- ing press-style technology, the newspaper invested in a computerized method that would eliminate the need to physically cast each letter of every page into lead plates for the presses. e automation and digitization of the "hot type" process did not leave linotype operators jobless, however. ose same employees who had run the hot metal type- setting machines were sitting in front of computers the next day, typing stories into a digital format rather than hammering them into place. Asked by the Times what the tech- nological upgrade would mean for him per- sonally, one employee responded, "it means I'll have to learn a new process." Automa- tion helped these workers print newspapers more efficiently but it did not replace them. Automation driven by artificial intelli- gence is likely to result in similar experiences for millions of workers. While artificial intel- ligence (AI) may render some jobs currently performed by people redundant, it will also create new positions that do not presently exist and expand the significance of many that already do. AI will lead to layoffs, but it will also require employers to retrain em- ployees into new or different jobs. e McKinsey Global Institute suggests fewer than five per cent of occupations can be fully automated given currently demon- strated technologies. However, 60 per cent of jobs could have at least one-third of their constituent activities automated. is im- plies a substantial workplace transforma- tion, requiring as many as 375 million people to switch occupational categories by 2030, according to a June 2018 report by the insti- tute. Indeed, of those executives surveyed, 62 per cent believe they will need to retrain or replace more than a quarter of their work- force between now and 2023 because of ad- vancing automation. Eighty-two per cent of executives at companies with more than $100 million in annual revenues believe re- training and reskilling must be at least half of the answer to addressing this skills gap, ac- cording to McKinsey. Transitioning existing employees into new roles can have legal consequences. If handled improperly, a claim for construc- tive dismissal by an employee as a result of this transition could come about. Employ- ers who expect to retrain and redistribute employees as a result of automation should equip themselves to proactively address is- sues surrounding constructive dismissal. What constitutes constructive dismissal? Constructive dismissal occurs where an employer demonstrates an intention to no longer be bound by the employment con- tract. It is distinct from a formal dismissal and is the result of either a breach by the employer of an express or implied funda- mental term of employment or, if a specifi- cally breached term may not be identifiable, cumulative employer conduct showing an intention not to be bound by the employ- ment agreement. An employee must show two things to establish constructive dismissal: the em- ployer unilaterally breached the employ- ment contract and the breach substantially altered a fundamental term of the contract. e breach may be immediate or it may be anticipatory, such as an announcement by the employer that it intends to make a fun- damental change at a future date. Impor- tantly, the breach of contract must be uni- lateral. A change that falls within the scope of the employment agreement's terms or one that is accepted by the employee will not be unilateral. e breached term must also be a fundamental one, such as com- pensation, hours of work, seniority, or job duties, and the fundamental term must be substantially breached such that the em- ployer appears to intend to cease its obliga- tions under the employment contract. Ab- sent a particular breach of a specific term, an employer's conduct may generally show the employer does not intend to be bound by the employment agreement, and may give rise to constructive dismissal. Faced with a change amounting to con- structive dismissal, the employee must treat the change as a repudiation of the employ- ment contract, object to the change, and either resign or continue working in miti- gation of their damages. If an employee can show constructive dismissal, damages are assessed as if the employee was wrongfully dismissed, typically calculated from the date of the breach of the employment contract rather than the date the employee resigned. How can employers mitigate risk? A constructive dismissal analysis is highly fact-driven. e particular employment agreement, including written offers, pro- motion letters, and verbal representations, as well as the reality of the situation must be considered. In the context of transition- ing existing employees into new roles, care needs to be taken to respect the funda- mental terms of the employment contract regarding compensation, hours of work, lo- cation, seniority, and job duties. If the em- ployment contract permits the employer to change an employee's job duties, the em- ployer should ensure other fundamental terms are changed as little as possible when modifying employee roles. If the change in duties is likely to be a substantial unilateral breach of a fundamental term, employ- ers should consider a number of strate- gies to reduce their potential liability for constructive dismissal. Advance notice of the change consummate to the employee's entitlement to reasonable notice for dis- missal should be provided if possible, and it should be made clear that the employee will be terminated at the end of that period if they do not accept the new terms. Where possible, written employee consent to the change should be sought. Where multiple employees will be affected, the employer should consider whether the change will have a discriminatory outcome. Significant transitions of employees into new roles is just one of the ways automation driven by AI will affect the workplace. Mass terminations, hiring practices, employee privacy, wages and benefits, occupational safety, and other issues will require care- ful and novel consideration by employers. Everyone will have to learn a new process. Mitch Frazer is a partner in Torys' Toronto office and the chair of the Pensions and Em- ployment Practice at Torys LLP. Lisa Tal- bot is a partner in the firm's Toronto office and a member of the Litigation and Dispute Resolution Practice and Employment Prac- tice. Brad Tartick is a senior associate in the firm's Toronto office whose practice in- volves all aspects of pensions, benefits and employment matters. Irfan Kara is an as- sociate in the firm's Toronto office whose practice focuses on employment litigation, class actions, corporate/commercial litiga- tion and privacy law. Pat Denroche is an associate in the firm's Toronto office whose practice focuses on pension and employ- ment law. You can reach them at (416) 865- 0040 or by visiting www.torys.com.

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