Canadian Employment Law Today

CELT June 26 2013.qxp:celt 467.qxd 13-06-17 10:36 AM Page 4 June 26, 2013 CASE IN POINT: CONSTRUCTIVE DISMISSAL Employers have some leeway in changing employee duties Employee refused new position with similar pay and responsibility after restructuring, despite having changed positions before BACKGROUND Walking the line of constructive dismissal THE REALITY of doing business in a changing economic climate can mean companies sometimes have to make changes quickly to meet their needs and stay afloat. These changes can be relatively minor or something major such as a restructuring, which can involve moving employees around. But when employees are moved around, their jobs can change, which raises the spectre of constructive dismissal. Employment lawyer Lorenzo Lisi examines a recent British Columbia case that showed employers should be allowed to make certain changes to employees' positions, and where it fits in the context of defining the line of what constitutes constructive dismissal. | BY LORENZO LISI | THE PACE of business moves very quickly and Canadian employers are often forced to make changes quickly and with very short notice. This is a fact of life in the new economy and often necessary to compete and survive. But there are rules and the law has adapted to deal with the situation where an employer seeks to make a change to a "fundamental" element of an employee's contract of employment without notice. The legal concept of "constructive dismissal" is not new. It was perhaps defined best by the Supreme Court of Canada in its 1997 decision in Farber c. Royal Trust Co., as follows: "A constructive dismissal occurs where an employer makes a unilateral and fundamental change to a term and condition of the employment contract without providing reasonable notice of that change to the employee." When this type of change occurs in the employment relationship, an employee is entitled to treat her 4 employment as "constructively terminated," which in turn will require that the employer provide reasonable notice of the fundamental change, or pay in lieu of that notice. The factors considered in determining the length of the notice are the same as if the employer were terminating the employee on a without-cause basis (age, service, position, remuneration). Some changes can be made However, not every change in employment constitutes a constructive dismissal. For example, while a decision by an employer to change an employee's position from vice-president to receptionist, would almost certainly be considered a constructive dismissal, the loss of an employee's parking spot would not. The test in determining if a constructive dismissal has occurred is an objective one. The inquiry focuses on determining the elements of the contract between the parties at the time of hire, how such terms may have evolved, whether there has been any breach and finally, if that breach was fundamental to the employment relationship. An interesting example of a court's assessment as to whether or not a change in position constituted a constructive dismissal can be found in the recent case of Meyers v. Chevron Canada Limited, which was decided by the Supreme Court of British Columbia. Warren Meyers was hired by Chevron Canada as part of its information technology (IT) department in November 1994. As of July 31, 2010, the date on which his employment ceased, he was the Applications Development Team Lead. He was 45 years old. During his employment, there were changes to Meyers's job within the IT department, some of which were lateral and not characterized as promotions. In 2010, in response to the downturn in the global economy, Chevron implemented a restructuring process for its business which included the IT department. This resulted in not only a reduction of certain personnel and reporting relationships, but also centralized the company's IT services in Canada. To implement the restructuring, Chevron used a systematic "top down" job replacement framework, where new positions in the restructured organization would be offered to employees based on their pay scale groups. The process itself was complicated but involved considerable input from the employees. Meyers was offered a position which was equivalent in scope and salary to his previous position, but changed the manner in which he would perform his Published by Canadian HR Reporter, a Thomson Reuters business 2013 Continued on page 5

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