Constructive Dismissal

Constructive Dismissal Case Law Pre-Potter

Potter, as reviewed above,  did not dramatically revise the common law dealing with constructive dismissal but the decision did set out an analytical review of the fundamental principles, ones which had been applied historically. It did deal with the unique issue of whether an administrative suspension may be implied as a term into the employment relationship, which was one of first instance before the Supreme Court.

The prior well-established principles remained in place. These are as follows:

  1. The first step is to examine the terms of the employment relationship, both express and implied. This was indeed the analysis step one in Potter. Such was the reasoning of Kiteley, J. in Schumacher v TD Bank. 1
  2. Apart from defining the terms to determine whether there has been a significant variation, the agreement itself may show a contracted right to cause the questioned revisions to take place. This will require “unambiguous contractual language permitted reclassification…2
  3. A substantial change in the duties and responsibilities, which is unilateral and goes to the root of the contract may be seen as constructive dismissal. 3 4
  4. The change must be fundamental. Generally speaking, “nothing is more likely go to the substance of the contract that the nature of the position and duties of the position. 5
  5. The test is an objective one. 7
  6. The employer’s conduct, presuming such a unilateral substantive change will be seen as repudiation of the existing contract. 8
  7. A demotion or reduction in job responsibilities can constitute a constructive dismissal. 9 The employer may well have a legitimate business interest is so doing but this is of no consequence. 10
  8. The burden is on the employer to be clear as to its directions. The failure to do so will be at its own risk. 11

There is also a famous quote from the Court of Appeal in Bechtel v Mollenkopf which states as follows:

The evidence led in this respect may have been relevant on the issue as to whether the assignment to new responsibilities was made in good faith and not as a disguised means of discharging the plaintiff. However, even if the jury were of the view that Inco’s complaints about the plaintiff were unjustified, and the employer erred in its assessment of the plaintiff’s capabilities, such a finding would not be decisive. 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.

A literal reading of this states that the employer has a wide latitude to make such changes as it sees fit. This must be read in the context of the surrounding cases.