Canadian Employment Law Today

6 | May 9, 2018 Canadian HR Reporter, a Thomson Reuters business 2018 Cases and Trends the temporary position. However, at the end of the contract, the vice-president wanted to keep Hagholm on, so he offered her a full- time position. Hagholm accepted the offer on the condition that she could work from home three days a week and commute to the Toronto office twice a week. e agreement was confirmed in January 1995. Hagholm worked for MicroAge under this arrangement for two decades, working from home for three days every week and coming into the office for two days. She became a manager, consulting services in 2000 and was responsible for staffing and budgeting. Her compensation included an annual bonus. Employer sold to another company In late 2015, MicroAge was sold to Coreio, another IT company that outsourced IT in- frastructure and operations support. Hag- holm continued to work from home three days a week until January 2017, when Co- reio changed her position to that of resource manager in the advisory services division. e change was part of a restructuring of the business. According to Hagholm, her workload increased — she wasn't allowed to use external recruitment agencies to fill job vacancies any longer, requiring her to do recruiting, screening and onboarding job candidates herself. Coreio also gave Hagholm a performance improvement plan that indicated several complaints about her performance, includ- ing poor punctuation and grammar. e company had also concerns over what it felt was declining performance since the sum- mer of 2016, including a failure to interview potential candidates for a client and not sub- mitting an ad to a client for approval before posting it. She was expected to attend week- ly meetings with her supervisor to discuss her progress and submit reports every week. Hagholm was also told that her bonus for the fourth quarter of 2016 would be $6,739, a significant decrease from her usual amount, which was always close to or at the maxi- mum entitlement of $18,000. MicroAge had told her bonuses were tied to company rev- enue, but Coreio management informed her they were partly discretionary, though they couldn't tell her how it was calculated. e company also said it lost a major client in 2016 that would negatively impact earnings. Finally, Coreio told Hagholm she could no longer work from home three days a week and she was expected to work at the Toronto- area office. e company didn't offer her any compensation to offset her increased costs from driving more and paying tolls, plus two to three additional hours of commuting each day she had to come to the office, as it said the work-from-home arrangement wasn't a term or condition of her employment and there was no written employment contract that entitled Hagholm to such an arrange- ment on a permanent basis. On March 1, 2017, Hagholm resigned her position because of the new work schedule, new reporting requirements, and bonus re- duction. She also filed a claim for construc- tive dismissal, though Coreio argued she had never indicated she had concerns about her performance improvement plan or working in the office five days a week. e court found that when Hagholm was rehired to permanent employment in 1995, she negotiated an agreement in which work- ing from home three days a week was a condi- tion for accepting the job offer. ough there was no written contract, the oral agreement she had with MicroAge's vice-president was real and continued for 22 years until Janu- ary 2017. As a result, working from home 60 per cent of the time was an essential term of Hagholm's employment agreement. When Coreio changed this term, it unilaterally breached the agreement and constructively dismissed Hagholm, said the court. e court also noted that requiring Hagholm to commute 220 km round-trip for an addi- tional three days a week would add significant costs in time, vehicle maintenance, fuel, and risk on the busy highways, and Coreio didn't offer compensation for the added burden. e court also found that Hagholm's bo- nus was determined in a different way than before and it was arbitrarily set by Coreio to a significantly lower level — 37.44 per cent of the maximum amount, after she received 90 to 100 per cent her entire time with MicroAge and first year under Coreio. is was a contra- vention of Hagholm's employment contract, since there was nothing indicating the bonus was tied to performance and the drop in earn- ings from the loss of a large client wouldn't be felt until 2017 — the bonus was for revenues in 2016. e change in bonus was another unilateral change that constructively dis- missed Hagholm, the court said. Since Coreio constructively dismissed Hagholm by changing key elements of her employment contract — the work-from- home arrangement and the amount received for her quarterly bonus — the court deter- mined Hagholm was entitled to damages in lieu of termination notice. Hagholm argued all 35 years of her service with MicroAge and Coreio should be factored in, but the court found no justification for including the 10 years before she quit in 1992. As a result, Hag- holm had 22 years of service, entitling her to 22 months of service, less one-and-one-half months' severance she had already received. e court also determined Hagholm was entitled to the maximum 2016 fourth-quar- ter bonus, consistent with previous bonuses, ordering Coreio to pay her $11,261 to bring her total bonus to the usual $18,000. For more information see: • Hagholm v. Coreio Inc., 2017 CarswellOnt 21149 (Ont. S.C.J.). Worker accepted offer on condition she could work from home « from CHANGES on page 1 has been terminated." e determination of whether there has been a substantial alteration to employment depends on the nature and degree of the changes. For example, if the move back to a former position is a significant demotion or would cause humiliation, it is more likely that a constructive dismissal will be found. Other substantial alterations could include changes in geographic location, working conditions or responsibilities. In Evans v. Teamsters, Local 31, the Su- preme Court of Canada ruled that there are circumstances where an employee is required to return to work for the same employer to mitigate her damages following a construc- tive dismissal. is requirement to accept re- employment is based on several factors that assess whether the breach of the terms of em- ployment was such that continuing with the employer would be unreasonable. Given the Evans factors, there may be cir- cumstances where an employee must accept a move back to her former position due to the obligation to mitigate damages. Also, courts may allow an employer some leniency where an employee's position is changed as part of a bona fide restructuring arising from economic circumstances. In a unionized environment, the ability to move an employee back to her former posi- tion will depend on the collective agreement — perhaps allowing for a trial period follow- ing a promotion, where the employer is per- mitted to return the employee to the former position if the trial is unsuccessful and there would be no obligation to maintain the em- ployee's higher rate of pay unless required. If the collective agreement does not pro- vide for a trial period, or if the trial period has expired, the agreement is likely to contain provisions that dictate what the employer must do in a restructuring situation. For more information see: • Farber c. Royal Trust Co., 1996 Car- swellQue 1159 (S.C.C.). • Evans v. Teamsters, Local 31, 2008 Car- swellYukon 22 (S.C.C.). Constructive dismissal « from ASK AN EXPERT on page 2

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