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Constructive Dismissal: Should you Walk the Walk

Knowing your boss is trying to force you out is one thing. Knowing when you can walk away and preserve your right to sue for dismissal is another altogether.

Each case will turn on its own facts, but generally speaking the Courts will look at the following criterion in deciding whether there has been a constructive dismissal:

1. has your salary been reduced;
2. have your working conditions changed;
3. is the new work demeaning in light of your previous duties;
4. would you be humiliated if you stayed on;
5. is there a reduction in bonus income;
6. is your reputation at risk in the community;
7. what is the economic condition of your employer at the time;
8. has there been a reduction in your duties and responsibilities;
9. what is your relationship with your co-workers after the move; and
10. are you moving from management to non-management.

We obviously don’t have the time to delve into all of the foregoing, but an illustration or two will be helpful.

In one case the claimant worked as the project engineer for a pulp mill. When the mill re-opened the management hierarchy had been reorganized and the Plaintiff’s position eliminated. He was encouraged to stay on and offered the position of plant engineer, a position which he occupied some 9 years earlier. His salary was to remain the same, however he would be reporting to someone who had previously been his junior and would have to supervise the maintenance staff. The trial judge held that he had been constructively dismissed. On appeal it was held that he had been laterally transferred.

In another case, the claimant, following a restructuring, was asked to become one of two directors of education for the Institute of Chartered Accounts of Ontario. Prior to the reorganization, the Plaintiff supervised several staff, had onerous administrative responsibilities, including a $2.8 million dollar budget and was the only director. After, he supervised only one clerical staff member, lost his administrative duties, was no longer responsible for the budget and was one of two directors. Shortly before the changes the executive director and claimant’s relationship deteriorated significantly.

The court held that he had been constructively dismissed and was justified in leaving his employment immediately. In doing so, it considered that the Plaintiff had lost status, profile and prestige with his fellow workers and among the community at large. It was also of the view that it would be unreasonable to expect the Plaintiff to continue working there in light of the acrimonious relationship which had developed with his immediate supervisor.

Persons leaving their employ should also be aware that they have a duty to mitigate their loss, or in other words do their best under the circumstances to earn replacement income. Judges tend to frown upon people who say “yahoo” and hit the links. The Courts have even gone so far as to say that the employee should accept the other position for a reasonable period of time while they search for alternate employment. In the first case discussed above, it was held that the Plaintiff should have stayed on for a time, while in the second, he was justified in leaving.

It should be apparent that it is important to seek the advice of counsel if you ever find yourself in this position. An error in judgment at this critical time could be very costly.

By Tom McCartney