Canadian Employment Law Today

STUART McKELVEY HALIFAX Have a question for our experts? Email Jeffrey.R.Smith@thomsonreuters.com Canadian HR Reporter, a Thomson Reuters business 2016 2 | April 13, 2016 with Brian Johnston Ask an Expert Answer: ere is risk of constructive dis- missal any time an employer imposes a sub- stantial change to the essential terms and conditions of the contract of employment without the employee's consent. As a result, a required relocation may lead to a valid claim of constructive dismissal if found to be a fundamental breach. As with most things in employment law, this all depends on the circumstances of the particular case. e leading case on constructive dis- missal continues to be Farber c. Royal Trust Co., updated by the Supreme Court's recent decision in Potter v. New Brunswick (Legal Aid Services Commission). Under Potter, a court's analysis for constructive dismissal due to a relocation will consist of two ques- tions. First, does the employer's unilateral change breach an express or implied term of the contract? And second, if so, was it a sub- stantial breach? According to Potter, "chang- es to the employee's compensation, work assignments or place of work that are both unilateral and substantial" could constitute constructive dismissal under this analysis. Whether a relocation will amount to con- structive dismissal depends upon a number of factors and the outcome in any particular case may be difficult to predict. For example, in Marshall v. Newman, Oliver & McCarten Insurance Brokers Ltd., the Ontario Court of Appeal held that a customer service rep- resentative of a small insurance brokerage was constructively dismissed when she was transferred to an office in another town, twice as far from the employee's home. e court found that job location was an essen- tial part of her contract of employment, and the employee had not been previously noti- fied of the potential relocation. In contrast, the Alberta Court of Appeal held that an employer's offer to relocate an employee two hours away from his current location was not a constructive dismissal of the employee in Brown v. Pronghorn Con- trols Ltd. In coming to this conclusion, the court noted that the employee had made it clear that he would transfer within the com- pany to advance his career, as well as the em- ployer's good faith and legitimate business reasons in proposing the transfer (the em- ployer made several alternative offers to the employee, all of which were refused). Other factors courts may consider in- clude the relative positions at each place of employment, the terms of the employment contract, industry standards, geographic distance, and the effect on the employee's personal and family life. An express or implied contractual term permitting the employer to make a reloca- tion should, in most instances, prevent a claim for constructive dismissal. However, if relocation has not been previously discussed, an employer's good faith in restructuring its business operations is only one contextual factor and will not trump what may other- wise be considered a constructive dismissal. In these situations, an employer should pro- vide as much notice as possible. In addition, covering relocation expenses, offering travel allowances, and flexible work arrangements will minimize the potential detrimental ef- fects of the relocation, and may help to avoid a constructive dismissal claim. Have a question for our experts? Email Jeffrey.R.Smith@thomsonreuters.com Changing timelines in a contract Question: If a contract with an independent contractor contains deadlines and specific timelines for the work, is there a risk of breaching the contract if the timelines change? Answer: Yes, in any contract, a failure to complete contractual undertakings or obli- gations by a specified date may be grounds for a breach of contract claim. Simply put, parties are obliged to live up to the terms they agree to in a contract; if the contractual terms include specific deadlines or timelines for the completion of certain works, a party risks breaching the contract if they fail to meet these deadlines. In determining whether there has been a breach and if so, the appropriate remedy, courts will consider both the intended na- ture of the contractual term and the actual effect of the breach. While, for the most part, strict performance of contractual obliga- tions is required, depending on the language of the agreement and the circumstances surrounding the alleged breach, courts may not consider a missed deadline important enough to warrant damages or termination of the agreement. For example, in Endacom 2000 Inc. v. Hydro One Networks Inc., Endacom con- tracted to produce state-of-the-art elec- tronic meters for Hydro One. After End- acom failed to meet the proposed delivery schedules on several occasions, Hydro One terminated the contract on the grounds of late delivery. However, even while Endacom admitted to missing the agreed-upon deliv- ery schedules, the Ontario Superior Court of Justice concluded that Endacom did not breach the contract by failing to deliver the meters on schedule. Accordingly, the court held that Hydro One wrongly terminated the contract on the basis of delay in the delivery of the meters. In coming to this conclusion, the court identified that there was no evidence it was crucial to Hydro One that the meters be de- livered by a particular date or that Hydro One suffered any specific prejudice by the failure of Endacom to meet its proposed de- livery dates: "It is not surprising that the scheduled dates for the delivery of the meters were not met. e development of the EPM 2000 was a totally new concept. It meant transforming the existing meters from an electric mechan- ical system to a completely computerized digital meter containing functions that had never been previously developed. Neither Endacom nor Hydro knew what the road ahead, in developing the EPM 2000, would entail. At the outset it must have been evi- dent that to develop the EPM 2000 as envis- aged by the parties would take a considerable amount of trial and error with both parties learning by the experience of the develop- ment process. In my view, scheduled dates for various phases of the development of such a futuris- tic product were meaningless. I suggest that the parties were more interested in develop- ing a quality product than they were con- cerned about delivery of the EPM 2000 at a Relocation and constructive dismissal Question: When asking an employee to move to another office location, is there a risk of constructive dismissal? If so, what can an employer do to mitigate that risk in case a relocation is required? CHANGING TIMELINES on page 7 » The appropriate remedy will be determined from the intented nature of the contractual term and the actual effect of the breach.

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