When you are hired into a role, or when you are hiring for a role as an employer, the duties and expectations from that role might change from time of time. It may be the case that an employee is presently performing duties that are substantially different than what they were hired to do.
This concept of doing something substantially different than what you were hired to do may constitute Constructive dismissal. Constructive dismissal is a legal concept which refers to a situation where an employer unilaterally changes the terms of an employment contract. When this happens, the employee is doing new job duties that they did not agree to. This unilateral change in job duties means that the employee was effectively terminated on the day their job changed, since their original contract has been violated. There have been a plethora of cases overseen by Canadian courts in recent years where an employer is being accused of constructive dismissal and as such, it may be useful for employers to learn about the concept and minimize their legal risks.
Examples of “constructive dismissal” include:
- Employee Harassment: the employee has an implied right to be free from harassment in the workplace. A breach of this right may constitute constructive dismissal.
- Location Reassignment: although some relocation may be reasonable for business reasons, instances involving pay cuts or demotion may constitute constructive dismissal.
- Changes to Job Assignment: if the nature of an employee’s work is fundamentally changed, this may constitute constructive dismissal .
- Change in Wages: if an employee does not receive their wages or has their wages reduced, this may amount to constructive dismissal.
- Changes in Work Environment: an unsafe or toxic work environment may constitute constructive dismissal.
Through our survey of case law we have discovered that there are two tests that can be applied to determine whether an employee has been constructively dismissed.
The First Test (found in Farber v. Royal Trust Co.,  1 S.C.R. 846)
- The employer makes a unilateral change that breaches either an express or implied term of the employment contract .
- A reasonable person in the same situation would believe that the change was substantial in nature.
The Second Test (found in Potter v New Brunswick Legal Aid Services Commission, Supreme Court of Canada, 2015)
Based on the cumulative actions of the employer (past or present), whether a reasonable person would conclude that the employer no longer intends to be bound by the terms of the original employment contract.
To best protect themselves from potential lawsuits in the future, employers should pay careful attention to the job description clauses in employment contracts.
We believe these tests capture an overview of the concepts around the topic of constructive dismissal, but be sure to check with your local counsel to confirm that these tests are similar in your jurisdiction.
The effect of reassigning your employees to new tasks
To provide an example that can assist to illustrate these points, in Whalley v Cape, a case decided by the Supreme Court of Nova Scotia (Whalley v Cape Breton Regional Municipality, Nova Scotia, 2018), we learn about the flexibility of employers to reassign project files without constituting constructive dismissal. We discovered this case in an article on Mondaq.com, entitled, “Canada: Flexible Job Descriptions - How Much Can An Employee’s Job Duties Be Stretched?”
In this case, Whalley, an Economic Development Manager was responsible for “the implementation of economic plans, programs, and services for the municipality.” He had been working on the “Port of Sydney File” for the majority of his employment until he was reassigned to a different file. Whalley sued for constructive dismissal arguing that his entire role had changed because he had been managing the “Port of Sydney File” for the past fifteen years.
The employer argued that it was within its rights to reassign files and that this does not constitute a breach of the contract. The Court agreed with the employer. Referring to the first test for constructive dismissal, the Court found that there was no unilateral change to Whalley’s employment contract. Based on his job description, it was not an express or implied term of his contract that he would always work on one specific file and therefore, it was reasonable to reassign him to a different file. Further, there was no change in pay, title, status or prestige when Whalley was assigned to a different file.
By way of counterexample, in another case, Maasland v City of Toronto (Maasland v City of Toronto, 2015 ONSC 7598) the Court found that the employer made a unilateral change to the employment agreement which was fundamental in nature, and therefore constituted constructive dismissal. We discovered this case in another article on Mondaq.com, entitled “Canada: Altering Outdated Job Description & Constructive Dismissal”. As we uncovered from this research, Maasland’s work involved operating hands-on computer engineering applications to address traffic control issues. She was later transferred to a role that mainly consisted of writing “Requests for Proposals” for traffic initiatives. The Court applied the test for constructive dismissal, which was outlined in Farber v. Royal Trust. The Court found that Maasland’s job changed from “operational” to “administrative” in nature. This was a fundamental, unilateral change, and met the standard of the constructive dismissal test. Further, a reasonable person in the same situation would have believed that this was a change to an essential term of the original contract and therefore, was substantial in nature.
The court decisions in these two cases provide some guidance to employers on job descriptions: job descriptions need not be overly specific and it is useful to include a term that provides the employer with flexibility in (re)assigning tasks. It may also be useful to include language in the job description indicating that job duties may be changed based on business needs, and that this does not constitute a breach of the employment contract.
Additional duties given to employees
We continued to research this point of law in Damaso v. PSI (Damaso v. PSI Peripheral Solutions Inc., 2013 ONSC 6923), where we discovered that the Ontario Superior Court of Justice expanded the list of factors in constructive dismissal to include “adding to an employee’s workload”. According to the article on Mondaq.com, entitled “Canada: And One More Thing… Court Finds That Adding To A Person’s Job Duties May Be A Constructive Dismissal”, Damaso was hired as a Field Service Technician and Computer Technician. His main duty was to service and repair printers. As the company expanded and made new changes to its business, Damaso was given additional responsibilities including supporting a new “Automated Division”, acting as the IT Administrator, and “project champion” for another software system in the company. Damaso, feeling overworked, asked for a pay raise or a reduction in his responsibilities. The employer refused, arguing that the new duties were a natural extension to his original contract.
The Court in this case acknowledged that employers are entitled to some flexibility in managing their businesses, but that flexibility is limited to modest increases in job duties. The court found in this case that the employer unreasonably added additional duties without clarifying the job that Damaso was responsible for. Further, Damaso had not accepted the changes made by the employer and there was no additional consideration given for these changes. As a remedy, the Court awarded Damaso damages equivalent to 12 months compensation.
What happens if the company faces major changes that require the altering of job duties?
Employers may undergo significant changes to their business that require altering job duties of employees. In these cases reviewed, internal changes did not exempt employers from properly providing notice (consult with your own local counsel to confirm that is the case in your jurisdiction). Therefore, it is important to pay attention to the original job description agreed upon by both parties. Employers should discuss with legal counsel and the employee before transferring their position in these cases, and confirm whether the employee officially agrees to the change. Otherwise, a reasonable person in the same situation may believe that an essential term in the contract has been changed, which would trigger a potential constructive dismissal.
Obtain consent and provide consideration for the change in job description
If a change in the job description is unavoidable due to business, financial or other reasons, it may be helpful to create a new contract or modify the original contract and give fresh consideration for the changes. If the employee agrees to the changes and new consideration is given to the employee, then the contract is much more likely to be legally enforceable. Fresh consideration could be anything of value, including an increase in salary, a new stock option agreement or additional vacation hours, etc. Generally it does not matter how big or small the consideration is, as long as something of value is being exchanged and the employee agrees that the consideration is sufficient. It is even better if this new agreement is made with the benefit of independent legal advice.
Result of a finding of constructive dismissal
If an employee is constructively dismissed, they can sue for damages. The amount of damages awarded depends on the jurisdiction, relevant legislation, and the provisions in the employment contract. If the contract specifies a notice period that is at least equal to the minimum notice period required by law, then Courts may enforce this period. For example, in Ontario, Sec 54 of the Employment Standards Act requires that employees working for over 3 months are entitled to at least one week of pay. In the absence of express terms, an employee can seek a higher notice period based on the Bardal Factors, as outlined in Bardal v. Globe & Mail Ltd. (Ont. H.C.,1960), which stated that the court may assess the following in determining (or adjusting) the reasonable notice period:
- Length of Service
- Character of Employment
- Availability of Similar Employment
It is important to note that it is possible that the employee may receive no damages at all, because the employee may have the duty to mitigate their damages in cases of constructive dismissal.
In Evans v. Teamsters (Supreme Court of Canada, 2008), the Court held that the duty to mitigate requires an employee to accept a reasonable job offer from their former employer under the following conditions:
- The salary will be the same and working conditions similar
- Personal relationships are not acrimonious
- Return would not lead to an environment of hostility, embarrassment, or humiliation
- Job descriptions play a vital role in determining whether an employee has been constructively dismissed.
- A general practice for employers should be to avoid broadening very specific or narrow job descriptions.
- Employers should include language that allows for the job duties to be amended, for example “the employer has the right to reassign files or projects for business reasons, without this constituting a constructive dismissal.“
- Before changing job duties, check the language of the original contract to see if a reasonable person would find new duties to be a part of the original contract.
- Update the contract when there are significant changes and at the same time, offer employees some sort of consideration when adding or changing duties (for example, a pay raise or extra vacation time).
- The right of employers to amendment the job description/duties should be brought to the attention of the employee prior to contract signing (so that the employee can sufficiently consider and discuss with their independent legal advisor or lawyer prior to signing.
- Employees should mitigate their damages by accepting offers of employment as long as the salary is the same, personal relationships are not severely affected and return to work would not involve a hostile work environment.
Written by: Sajan Dhindsa
Edited by: Rajah Lehal