Canadian Employment Law Today

Canadian HR Reporter, 2020 to the contract of employment represent the "first branch" and those where the employ- er's overall conduct reveals that it no lon- ger intends to be bound by the contract of employment are covered under the "second branch." The employer's decision to lay off in the absence of a contractual right to do so would be assessed under the first branch. The second branch is typically reserved for situations involving employer harassment or abuse. In analyzing whether a layoff meets the test for constructive dismissal under the first branch, a two-step test is applied. First, it must be determined if the layoff was imposed "unilaterally" by the employer and, therefore, without contractual author- ity. Employee consent, agreement or con- donation of a layoff decision would confer contractual authority and dispose of the em- ployee's claim. Second, the court must be satisfied that the breach was "substantial" from the per- spective of a reasonable person in the same situation as the employee at the time of the breach. As noted, the case law predominantly demonstrates that a layoff without contrac- tual authority is a substantial alteration of the contract of employment. In an uncertain economy that is fundamentally altered by an unprecedented global pandemic, the expec- tations of a reasonable person may be radi- cally different. A reasonable person may not view an unavoidable temporary cessation of employment as substantial in nature. COVID-19 has dramatically altered how we function as a society. For the foreseeable future we cannot interact, shop or work in the same way that we did prior to the pan- demic. Clearly, our reasonable expectations have changed and the courts will undoubt- edly follow suit by applying a more flexible perspective toward layoffs and other em- ployment changes that may not be expressly contemplated. Practicality and good faith Constructive dismissal claims, in the best of times, are risky endeavours for employees. In most cases, employees must resign from the employment relationship to pursue the claim. Abandoning recall rights will permit employers to argue that the employee failed to take reasonable steps to mitigate the claimed loss. The inability to prove the claim leaves the employee with a resignation and a potentially oppressive costs order. Further, employees expect to be recalled to work. There appears to be little incentive for employees to abandon an inactive employ- ment relationship in search of opportunities in an uncertain economy. While COVID-19 has undoubtedly raised important questions about an employer's right to manage its business, good faith as an organizing principle in all contractual re- lationships will not change. The employer's best defence to avoid and mitigate liability may simply be to manage its employees in the spirit of good faith, honesty and trans- parency. Employees will respect it and courts will note it. For more information, see: • Trites v. Renin Corp., 2013 ONSC 2715 (Ont. S.C.J.). • Vrana v. Procor Ltd., 2004 ABCA 126 (Alta. C.A.). • Chea v. CIMA Canada Inc. 2016 ONSC 1937 (Ont. S.C.J.). • Turner v. Uniglobe Custom Travel Ltd. 2005 ABQB 513 (Alta. Q.B.). • Greene v. Chrysler Canada Ltd. 1982 Car- swellBC 205 (B.C. S.C.). • Petras v. Construction and General Workers' Union, Local 602, 1986 CarswellBC 2524 (B.C. S.C.). • Hefkey v. Blanchfield, 2020 ONSC 2438 (Ont. S.C.J.). • Potter v. New Brunswick Legal Aid Services, 2015 SCC 10 (S.C.C.). July 15, 2020 | Canadian Employment Law Today CREDIT: WENDELLANDCAROLYN ISTOCK A reasonable person in the new reality may not view an unavoidable temporary cessation of employment as substantial in nature. ABOUT THE AUTHOR Rishi Bandhu Rishi Bandhu is an employment lawyer in Oakville, Ont., advising employers and employees on all aspects of employment and labour law. He can be reached at (905) 849-0025 or rishi@blpc.ca.

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