Canadian Employment Law Today

January 22, 2014

Focuses on human resources law from a business perspective, featuring news and cases from the courts, in-depth articles on legal trends and insights from top employment lawyers across Canada.

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CURRENT NEWS AND PRACTICAL ADVICE FOR EMPLOYERS Constructive dismissal: Should I stay or should I go? Employee claims becoming commonplace PM40065782 | BY RITU MAHIL | "SHOULD I STAY or should I go?" may be the question an employee asks himself when he faces a difficult working environment and considers filing for constructive dismissal. Constructive dismissal is when an employer indirectly encourages an employee to resign by failing to comply with the employment contract or onesidedly changing the employment terms without the employee's prior consent. It is distinguished from an ordinary resignation because it is the employer that initiates changes to the terms and conditions of the employment contract. Put bluntly, it is when the employer makes the working conditions completely intolerable for the employee with the intention of "swaying" the employee to resign instead of outright firing him. Once the employer has changed the terms and conditions of the employment contract, the employee must file for constructive dismissal within a 90day time period from when the changes took place for the case to be admissible in the courts. The extent of an employer's failure to meet its contractual obligations and time taken to deliberate also affect the likelihood the employee will win a constructive dismissal case. To put this in context, common examples of changes to an employee's working conditions include: • Reduction in the employee's powers or duties that involve a significant loss of the employee's prestige and status as a result of reorganization in reporting arrangements. • Threats of dismissal or demotion and unfair suspensions. • Significant reduction in working hours, salary or employee benefits. For the past two years, the Supreme Court of Canada has seen a notable increase in constructive dismissal cases. A recent example includes the case of Potter vs. New Brunswick (Legal Aid Services Commission), which began in 2006 when David Potter was appointed as the Executive Director of New Brunswick Legal Aid Services Commission. During his term, Potter had a number of complaints made against him by staff and his relationship with the commission's board of directors deteriorated. At this point, both parties began discussing a mutually acceptable way of bringing his contract to an end. In January 2010, Potter went on sick leave and was asked not to return until further direction from the commission. His salary and benefits were continued. Two months later, he filed an action against the commission, claiming he had been "constructively dismissed," meaning the commission had effectively changed the employment contract without providing reasonable notice. JANUARY 22, 2014 In This Issue ASK AN EXPERT: Reclaiming overpayments • Time allowed to review contract 2 CASES AND TRENDS: No cause where employee's wife deposited employer's funds 3 CASE IN POINT: Employer not at fault for failure to accommodate 4 YOU MAKE THE CALL: Manager or dispatcher? 8 Angry worker didn't have intent to quit: Board The commission said claiming constructive dismissal was incorrect and essentially meant Potter had resigned. The commission subsequently stopped his salary and benefits. At this point, the case went to court. The court found Potter was not constructively dismissed and, by commencing legal action, Potter had effectively resigned. In October 2013, the Supreme Court of Canada granted a leave of appeal for the case — it has yet to hand down its final decision. The Potter case demonstrates that employers must exercise caution when dismissing employees. There can be a fine line between constructive dismissal and an employee's resignation. AN ONTARIO EMPLOYER has been ordered to fork over termination pay after assuming a worker quit her job following an argument with her boss. Rita Oomen worked for Oomen's Glass, a supplier of glass products such as windows and mirrors to residential and commercial customers in Kingston, Ont. The company was owned by her cousin, Joe Oomen, and Rita began her employment there on Dec. 11, 2006. While employed with her cousin's company, Rita Oomen had personal problems to deal with, including health issues and difficulties in her relationship. These problems led to errors that cost Oomen's Glass both money and goodwill with its customers. Joe Oomen discussed these problems and their effects on the business with Rita, but he chose to continue employing her because she was family. Joe later testified any other employee with similar performance issues would have been terminated earlier. On March 14, 2012, Rita called Joe on the phone. They started to have a heated argument in which they yelled at each other. Two other employees who were in the office overheard the argument and testified that, after Rita hung up, she said she was going to quit. One co-work- Continued on page 6 Continued on page 7 It is advisable for an employer who is unsure whether employees will be recalled to work out the various outcomes of the layoff.

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