Employee's position was not restored on return from stress leave. Ontario Court of Appeal grants ten months' salary in lieu of notice
In an interesting decision released March 31, 2005, the Ontario Court of Appeal at Toronto reversed a trial judgment and granted ten months' salary to a claimant whose duties as a customer service representative for a car dealership were not restored on her return from extended stress leave.
Instead of reinstating the employee to her original positiion, the employer, a Peterborough Ford dealership, offered her the same salary in a different position which did not involve contact with the public. The employer contended it no longer had an available customer service position for the returning employee.
For the Court, Chief Justice Roy McMurtry, stated as follows:
"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.
[25] It is my conclusion that Blondeau was constructively dismissed. Holiday Ford unilaterally made a substantive alteration to the essential terms of Blondeau’s contract of employment when it did not return her to her former position as “service advisor” with the same rate of pay."
For complete text of this decision, see: Blondeau v. Holiday Ford: http://www.ontariocourts.on.ca/decisions/2005/march/C40981.htm
For more information on employment law and the law of constructive dismissal in Toronto and Ontario, see: www.wiselaw.net/employment.html
- Garry J. Wise, Toronto
Wednesday, April 13, 2005
Constructive Dismissal - Case Update
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4 comments:
Hi there Garry....
Does this mean...that if an employee takes a leave of abscence for maternity paternity fraternity greaving or illness such as stress that the business is held hostage from being able to re-structure, modify or re-engineer? What if a business is bought sold or merged? What if it goes under?
What if the business sufferes significant damages because of the negative effects of the employees Leave of Abscence. Is there any obligation of the employee to provide sufficient notice to the employer? In this case...did the source or cause of the stress leave have any bearing? If the stress was the result of working conditions, I could see the case for the employee, but then the argument could easily be made that the employee's working conditions were improved at the same financial obligations and salaries and benefits with the potential for reducing or eliminating the same stress that resulted in the leave of abscence in the first place. I would think that equivalent compensation alone unless the offered position is intolerable or humiliating and the working conditions make it impossible to fulfill the employees obligation, that further penalties to the employer are excessive.
Employers make a significant investment in employees and should be entitled to damages aswell espciacially in instances where the employee has damaged or harmed the employers business either while being employed and upon and after their leave of abscence. The ways the laws are headed it will soon become inadvisable to take the risk of employing anyone.
drjingles
In this case the Court found that the employer's conduct was very much a factor - the employer may not have acted reasonably to accomodate Ms. Blondeau's legitimate concerns as to the change in her duties on her return from this disability leave after a series of family tragedies.
I suspect that factor, above all was determinitive in this Judgment. Food for thought - would a different interpersonal approach have changed the outcome? Underlying most constructive dismissal cases in small businesses is a breakdown in goodwill between employers and employees who have previously enjoyed a high degree of mutuality in their employment relationships.
Chief Justice McMurtry's comments speak to this:
"...Holiday Ford knew that Blondeau had been on stress leave for a lengthy period of time and was obviously in a vulnerable condition. In my view, a more responsible employer would have made greater efforts to address Blondeau’s concerns when she returned to the auto dealership."
An employer is not precluded from making necessary structural changes under Ontario law. However, if an employee's position is to be eliminated or fundamentally changed, reasonable notice to the employee, or pay in lieu of such notice, is required.
There are indeed circumstances where the post-departure actions of an employee are actionable.
As an example, even absent a non-solicit/non competition agreement, a former employee may be liable for damages if there is a breach of his or her fiduciary duties to the employer.
Such duties include a prohibition against taking client/customer lists, utilizing proprietary or confidential information, and in certain circumstances, a restriction for a reasonable time against contacting the customers of the former employer to solicit business - although where professionals are involved, such as dentists, accountants or physicians, the duty to serve the client or patient is an important offsetting factor.
The Ontario Employment Standards Act has only limited provision, however, for notice periods by employees to employers.
This may be the case because historically, the employer held such a huge advantage in terms of power and leverage in employment relationships that an entire body of law was required and developed to protect employees from oppressive and unfair treatment.
Ontario law is quite arguably more protective of employees than is the case in many other jurisdictions.
An employer's legitimate concerns, accordingly, are best protected within the context of Ontario law by the completion of employment agreements with employees at the time of hiring.
If you are an employer, this issue is well worth a discussion with your lawyer.
An employment agreement template may readily be drafted to address the reasonable requirements of a particular business enterprise. Such agreements can serve to clarify expectations and manage risk factors upon termination.
Garry J. Wise
Visit our Website: www.wiselaw.net
As part of a significant recent company reorganisation, my salary was reduced by approx. 25% and my role was rezoned to one that implies less responsibilities and not suitable to my qualifications and experience. However, no alternative package was offered. Do I have a case for constructive dismissal?
What constitutes a reason for a stress leave?
Issues at work have caused my health to be in jeopardy. I have fibromyalgia and the stress from my workplace has resulted in time off. My manager is doing nothing whatsoever to help me with this problem because that would be he would have to deal with another employee who is causing my stress.
What do I do?
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