Constructively Dismissed Employee Entitled to 28 Months Notice and $25,000 in Damages
In a recent Ontario case, a court awarded an employee 28 months notice and $25,000 in damages for bad faith after finding the employer constructively dismissed the 58-year old worker.
The employer is a large corporation with 23 facilities in 16 countries around the world, engaged in the manufacture and sale of metal parts.
The employee began his employment with the employer in 1982 where he worked on a full-time basis in a variety of capacities, including as a quality test technician, a cell service technician and a quality test service technician, all of which were unionized positions.
In 2010, the employee was promoted to the role of sales and service technician, a non-union position. His yearly income was $62,000, plus 3% to 5% commission on sales.
In January 2017, the employee was told he was being assigned to a different position, in which he would no longer work in sales or make commission and would work full-time on the plant floor doing maintenance and repair work. He told the employer he was not interested in the new position because he liked the work that he was doing; he did not like the new position’s duties or its remuneration.
The employer told him that if he did not report to work and start performing the full duties and responsibilities of the re-assignment, he would be considered to have terminated his employment.
The employee’s employment ended on January 24, 2017 when he did not report to work at his new position. He was 58 years old.
The employee claimed that he was constructively dismissed by the employer and he was entitled to reasonable notice of termination in the amount of 28 months. He submitted that when the employer ended his role as sales and service technician and unilaterally reassigned him to the job of project technician, the employer substantially altered the essential terms of his employment contract such as to amount to a breach of contract and that he was therefore constructively dismissed.He also claimed damages for bad faith in the amount of $100,000.
The employer argued that there were good business reasons for “realigning” the employee’s position and that the new job was similar to the job the employee was already doing. The employer submitted that the employee had an obligation to try out the new position as a show of good faith.
First, the court applied the two-pronged test for determining if the employee had been constructively dismissed. The first stage involves a consideration of whether the employer’s unilateral change constituted a breach of the employment contract. If it is found to be so, then the second stage involves a consideration of whether the employer’s ongoing conduct demonstrated an intention to no longer be bound by the employment contract.
The court found that the changes proposed by the employer would cause a reasonable person in the same situation as the employee to feel that the essential terms of the employment contract were being substantially changed. The court found that these changes were not reasonable and were not in any way within the scope of the contract of employment between the employee and the employee. As a result, the court found that the employee was constructively dismissed by the employer from his position as sales and service technician.
Common-Law Notice Entitlement
The court explained that while there is no absolute upper limit or cap on what a long-term employee might expect in the way of notice, exceptional circumstances are required before the notice period can exceed 24 months; those exceptional circumstances must include more than a lengthy period of loyalty and dedication to the employer and the business venture.
The court found that the employer’s conduct rose to the level of exceptional circumstances such as to merit a longer notice period. It found that the employer’s conduct included the unilateral breach of the governing contract of employment, the radical reconfiguration of the job description, which amounted to a demotion, the mistaken or misguided rationale proffered for the changes, and the domineering attitude taken by the employer throughout, culminating in the unilateral imposition of the changes. As a result, the court concluded that the reasonable and appropriate period of notice for the employee was 28 months.
Damages for Bad Faith
In support of his claim for damages for bad faith, the employee submitted that he was terminated from his sales and service technician job and assigned to the lower status duties and responsibilities of the specially created position of full-time parts technician in the hope that he would resign from his employment so the employer could avoid having to provide him with reasonable notice. The court stated:
“I am of the view that a reasonable person contemplating the overall circumstances of this case would conclude that the [employee] would suffer some degree of mental distress as a result of the loss of his employment and that such mental distress would be more significant by virtue of his age at the time, and his stated intention to retire from his position with the [employer].”
As a result, the court ordered an award of aggravated/moral damages for bad faith in the amount of $25,000 to the employee.
The Kitchener-Waterloo employment lawyers at Petker Campbell Postnikoff have many years of experience advising non-unionized employees and employers on a variety of workplace issues, including harassment and termination. Our team will walk you through the details of your dispute, advise you on your rights, responsibilities and obligations, and help you understand your options. If your dispute cannot be settled through negotiation, we can represent you through mediation and the court process.
We represent clients throughout southern Ontario, including the communities of Cambridge, Guelph, Elmira, Brantford, Fergus, Elora and the surrounding area. Call 519-886-1204 or contact us online for a consultation.