Constructive dismissal cases remain “high risk” for employees as the most recent case on the issue, Meyers v. Chevron Canada Limited, 2013 BCSC 420 (CanLII), demonstrates.
The employee (plaintiff) must establish, as a threshold matter, that he or she was constructively dismissed. The leading case on constructive dismissal is Farber v. Royal Trust Co. [1997] 1 S.C.R. 846 where the Supreme Court of Canada observed:
Where an employer decides unilaterally to make substantial changes to the essential terms of an employee’s contract of employment and the employee does not agree to the changes and leaves his or her job, the employee has not resigned, but has been dismissed. Since the employer has not formally dismissed the employee, this is referred to as constructive dismissal”. By unilaterally seeking to make substantial changes to the essential terms of the employment contract, the employer is ceasing to meet its obligations and is therefore terminating the contract. The employee can then treat the contract as resiliated for breach and can leave. In such circumstances, the employee is entitled to compensation in lieu of notice and, where appropriate, damages.
To reach the conclusion that an employee has been constructively dismissed, the court must therefore determine whether the changes imposed by the employer substantially altered the essential terms of the employee’s contract of employment.
The British Columbia Supreme Court elaborated on the factors to be considered:
In a claim for constructive dismissal, the court must determine whether the employer’s direction to the employee amounts to repudiation of the contract of employment: Longman v. Federal Business Development Bank, [1982] B.C.J. No. 1521 at 131 (S.C.). The terms of the employment contract and the nature of the breach must be considered in order to determine whether there has been a fundamental breach of the contract of employment: Hart v. Bogardus Wilson (1984) Ltd. 1987 CanLII 2785 (BC CA), (1987), 13 B.C.L.R. (2d) 269 (C.A.). In order to establish that he has been constructively dismissed, the employee has the onus of establishing that the changes proposed were a breach of the contract of employment and not permitted by the contract: Evans v. Listel Canada Ltd., 2007 BCSC 199 (CanLII), 2007 BCSC 199 at para. 63.
Whether a breach of a term, either implied or express, constitutes repudiation depends on the nature and seriousness of the breach, the intention of the parties and the surrounding circumstances: Longman at p. 131; Robertson v. West Fraser Timber Co., 2009 BCSC 602 (CanLII), 2009 BCSC 602. The test for determining whether the breach is a fundamental breach that goes to the root of the contract is an objective one: Cayen v. Woodwards Stores Ltd. 1993 CanLII 1416 (BC CA), (1993), 75 B.C.L.R. (2d) 110 at para. 23.
Finally, the Court summarize the law:
It is clear from the case law that each case turns on its own facts. In every case it must be determined whether there has been a breach of a term of the employment, either implied or express, and, if there has been a breach whether it constitutes repudiation. Whether the breach constitutes repudiation depends on the nature and seriousness of the breach, the intention of the parties and the surrounding circumstances.
In the Meyers case, the judge commented that there was no written contract and that over the course of his employment, the employee “had several job changes, some of which were considered promotions and some which were considered lateral moves” all of which he appears to have agreed to.
In the context of a restructuring of the operations, the employee was offered a position of Business Analyst. He had previously held the position with a title of Applications Development Team Lead in the company’s information technology department, which was eliminated. He viewed the Business Analyst position as a demotion and a constructive dismissal. He resigned and sued the employer. In support of his claim, he “points to the facts that he would no longer have any employees directly reporting to him, or employees who he would be responsible for in terms of their performance reviews.”
The Court disagreed stating:
I am not satisfied that there should be a term implied into Mr. Meyers' employment contract preventing Chevron from varying the subject matter of Mr. Meyers’ management responsibilities. In my view, the evidence does not support the view that the parties contemplated that Mr. Meyers’ role was so rigidly defined. As noted above, Mr. Meyers’ supervisory role had diminished over time. An employer requires some latitude to structure the affairs of its operation, and such an inflexible term would shift the balance too far in favour of the employee.
Even if this were a term of Mr. Meyers’ contract of employment, I am of the view that the breaches he complains do not go to the root of the contract. The cases before me suggest courts will find a fundamental breach where the employer has made a dramatic qualitative change in a position held by the employee for a significant period of time.
In fact, the Court stated that the Business Analyst position “was not a dramatic qualitative change in his duties.” The Court considered what work would have been performed had the employee accepted the Business Analyst position (i.e. had he accepted the “position he would have significant leadership responsibilities as a project manager, as well as be responsible for the projects budgets.”.)
Furthermore, the fact that he would have lost some stature and was moved from an office to a cubicle, the Court found that this might have been subjectively humiliating and degrading, it could not be said to be objectively so.
The court dismissed the claim, and held that the plaintiff had failed to prove that he had been constructively dismissed.
Take Aways
This is a tough result for the plaintiff. He resigned his employment and sued for damages arising out of what he viewed as a constructive dismissal. In the end, the case was dismissed, and the defendant was entitled to its costs at Scale “B”.
This case, and many others, highlight that in the absence of an express or implied contractual term, job duties will not be rigidly defined such that an employer is precluded from making changes (provided, of course, that these do not trigger the Farber constructive dismissal principles). Furthermore, humiliating and degrading conduct must be looked at under an objective lens.
Change can certainly be uncomfortable and stressful for most people - but that will not open the employer up to a constructive dismissal claim, nor will it justify the employee quitting and claiming damages. The pendulum in the constructive dismissal case law continues to swing in the direction of the employer.
