Constructive Dismissal

A Fundamental Analysis

The leading case, on a principled basis, is a 1989 decision of the Ontario Court of Appeal which allowed the employer the implied right to change the plaintiff’s location from Ottawa to Montreal. 1

The preliminary issue to be determined was whether the plaintiff had shown a fundamental change in the terms of employment. The Court noted that a change in location would not reflexively lead to such a breach. Reference to that end was made to Canadian Bechtel v Mollenkopf: 2

The plaintiff had no vested right in the particular job initially given to him. If the employer, although mistaken, acted in good faith and in the protection of its own business interests, the plaintiff would have had no right to refuse the transfer.

To the same end was a 1984 decision 3 in which the court stated:

The law appropriately permits employers some flexibility in deciding location of employment. When an employee is requested by his company to make a geographic move, and when moving expenses are to be paid, and he is promised a position of similar or higher status in the firm with similar fringe benefits, he must normally accept the move, or he will not be heard to say that he has been wrongfully dismissed. His leaving will be considered voluntary.

The Court of Appeal in Smith v Viking notably reversed the trial judge on this issue and found in favour of the employer’s implied right to effect the geographic location. The company had committed to paying the plaintiff’s moving costs to Montreal, although the specific details of this had not been defined. The Court dismissed the claim:

As I understand counsel for the respondent in this court, he was of the view that the company could not relocate its business to the financial detriment of the respondent without creating a fundamental breach of its contract of employment. Consequently, the move itself was the fundamental breach. Counsel seemed to equate the terms of employment with the personal situation of the respondent, a life-long resident of Ottawa, who had a family and a home with a mortgage. It has never been my understanding that an employee is entitled to a job for life in a place of his choosing. If he wishes to remain an employee of a given company, he must expect reasonable dislocations in that employment including the place where it is to be performed. There was no evidence in this case that Viking acted unreasonably in notifying the respondent of its intended move or of its desire that he and others should accompany it. The sole complaint was about its lack of timeliness and specificity as to what moving expenses it would be prepared to absorb.

This issue was again before the Ontario Court of Appeal in Rasanen v Rosemount, a 1994 case which also involved the principle of issue estoppel. Two of the concurring decisions agreed that the employer had the right to change job location from Toronto to Calgary. In this case, the employer had agreed to pay the costs of the relocation and further that the position in Calgary was an equivalent one.  There was evidence that other employees had been similarly transferred. The decision of Carthy J.A. stated, with which Morden A.C.J.O. concurred, referring to his acceptance of the decision of the trial judge:

I agree with this conclusion. It is clear on the evidence that the move to Calgary would not involve a demotion or loss of pay or benefits and that, although there was no written policy, other employees of the company had been transferred and their costs of moving had been paid.

The 1987 decision of Weiler J. of the Ontario County Court in Aubin v H.B. Group Insurance Management determined that although the employer had the right to effect a relocation of job location from Toronto to Winnipeg, it was nonetheless required to give the employee a reasonable time to agree or disagree with the offer of a move of such a magnitude. The case is not definitive of the principled issue.

A 1996 decision of the Alberta Q.B. also agreed with the general proposition that the employer has the right to change job location provided that the new position is equivalent. 4

The Alberta Court of Appeal considered this question in its 2011 decision. 5 The trial judge had dismissed the claim.

The plaintiff worked in the Red Deer office of the defendant. Due to the loss of a significant client in this office, the plaintiff was offered an equivalent position in Sedgwick, a two hour drive away, with relocation assistance.

The plaintiff had previously moved, in his career, from Camrose to Calgary to Swift Current and to Red Deer. The sole move while employed by the defendant was the last move to Red Deer.

The Court of Appeal agreed with the trial judge’s conclusion that there was no fundamental breach.

The plaintiff's counsel has urged upon me the decision of Hunt v. Cimco Ltd. reflex, (1976), 2 A.R. 514, where the court found that Mr. Hunt was justified in refusing to go to Winnipeg because there was no firm commitment as to his salary. Given what seems to have been a common, although unspoken, understanding that Mr. Aubin's salary and job conditions would remain the same, I prefer to rest my decision on the lack of notice given to Mr. Aubin concerning the proposed transfer and the time within which he had to accept it. In these circumstances, even though an employer may be justified in terminating an employee for refusal to transfer, adequate notice must still be given. The question of notice or the lack thereof regarding a proposed transfer was not considered in Birnbaum v. Lambda Mercantile Corp. Ltd., [1977] 1 A.C.W.S. 394 (Ont. H.C.), and the decision may be distinguished on that basis. (ed-Birnbaum decision was a mitigation case, not one involving the employer’s right to move)

A contrary conclusion was reached by the B.C. Supreme Court in its 2005 decision. 6 The plaintiff was employed in Vancouver, trading equities on behalf of institutional investors. She was offered and refused a move to San Francisco. The court saw no need to imply such a right of relocation, nor was there any prior agreement to allow this. Of some interest may be the court’s review of prior authorities: 7

The present case differs materially from those cited by counsel for UBS Securities.  It is not a case in which the requirement to move was raised with the employee at the time of hiring or subsequently in the course of any performance review or planning procedure: Holgate v. Bank of Nova Scotia,  1989 CanLII 4660 (SK KB), [1989] 27 C.C.E.L. 201 (Sask. Q.B.); nor a case in which the employee had accepted prior transfers:  Reber v. Lloyds Bank International Canada (1985), 1985 CanLII 153 (BC CA), 18 D.L.R. (4th) 122 (B.C.C.A.), Jim Pattison Industries Ltd. v. Page, [1984] S.J. No. 448 (C.A.), Durrant v. Westeel-Rosco Ltd. (1978), 1978 CanLII 277 (BC SC), 7 B.C.L.R. 14; nor a case in which the employer faced financial difficulties compelling consolidation or restructuring:  Smith v. Viking Helicopter Ltd. (1989), 1989 CanLII 4368 (ON CA), 68 O.R. (2d) 228, Morris v. International Harvester Canada Ltd. (1984), 7 C.C.E.L. 300; nor a case in which the employer was attempting to accommodate an employee who was no longer able to perform at a level required of the position in which the individual was employed: Canadian Bechtel Ltd. v. Mollenkopf (1978), 1 C.C.E.L. 95, and Marko v. Toromont Industries Ltd., [1998] O.J. 5539 (QL) (Gen. Div.); nor a case in which it could reasonably be expected that transfer would be a fact of life as was the case in Stefaovic v. SNC Inc., [1988] 22 C.C.E.L. 82 (Ont. H.C.) where a move should have been reasonably anticipated upon completion of an engineering project at a specific geographical location.

Generally speaking, a transfer from one jurisdiction to a second will be accompanied by the common law of the hiring jurisdiction, save a contract to the contrary. This is particularly important in international transfers where the new jurisdiction has a legal system which does not incorporate common law principles, such as most American states.

The employment contract presents an excellent opportunity to address these issues, as to whether the employer should be given the right to effect a relocation, under what terms as to notice and payment of what expenses and whether the move should be coordinated with the employee’s personal life issues, such as children’s schooling and spousal issues, employment or otherwise.