Constructive Dismissal

B.C. Case Law

The recent decision in B.C. allowed the employee’s submission that the employment contract had been repudiated by the conduct of the employer. For this reason, the employment contract and its termination clause were determined to be unenforceable. The plaintiff’s claim was determined by common law. 1 The employment agreement called for a termination payment of four weeks’ compensation for each year of service. His years of service for this purpose were roughly 11.

The decision recites that the parties had agreed to the relevant law on this subject, which was summarized as follows:

The parties agree on the applicable law. Repudiation is a breach of contract by one party giving rise to the right of the other party to terminate the contract and pursue the available remedies for the breach. A breach is a repudiation of the contract if it is a breach of a contractual condition or of some other sufficiently important term of the contract so that there is a substantial failure of performance (see Potter v. New Brunswick (Legal Aid Services Commission), 2015 SCC 10 at paras. 144-145).

The plaintiff’s employment was terminated on April 4, 2022. This was without cause. The termination letter requested certain conditions for the termination payment, one of which was the duty to report mitigation efforts monthly and the disclosure of the details of any job offers received. A second letter sent April 29 stated that the failure to provide such reports would result in the cessation of all payments. The agreement required payments based on salary and commissions. Only the salary sums of severance were received and even these payments ended July 8. There was no explanation offered for paying only the salary components.

The defendant acknowledged that while the agreement did require mitigation, it did not mandate the reporting obligation.  The plaintiff did find new employment the following February. The common law period was set at 18 months. An award of punitive damages of $25,000 also followed due to the failure of the employer to honour its clear contractual obligations.

The reasons did not offer a detailed review of the law on repudiation, put charitably.  On these facts, the court found that the employer had repudiated the contract and that the claim would be assessed by common law standards.

A prior B.C. decision from 1995 also allowed the defence of repudiation to avoid the contract. In this case, the employer was found to have asserted just cause when it knew that none existed. 2 This decision in Dixon was not referenced in Klyn. The defence of just cause persisted until one month prior to trial. The employer testified at trial that it believed it has “business cause” to terminate but did not know whether it had legal cause. The court in Dixon found that the employer had committed the tort of deceit by advising the employee that it had cause when it knew it had none and also that it had defamed the plaintiff. For these reasons, repudiation was found. 3