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Is it me or have there been a lot more constructive dismissal cases coming through the courts these days?

The most recent case is Rowley v High Strength Plates & Profiles Inc. (October 20, 2011) where an employee, faced with what he believed were circumstances giving rise to a constructive dismissal.

In June 2009, the plaintiff was asked to accept a temporary reduction in the rate of commission he was entitled to receive as part of his compensation. Other sales staff were also asked to accept the temporary reduction.  The plaintiff “agreed to the change and entered into a Temporary Commission Agreement with High Strength covering the months of May to August 2009 only.”

There was some discussion at a meeting in June/July 2009 of the plaintiff becoming the sales manager, but no commitments seem to have been made in that regard.  Then, on August 7, 2009, at a meeting, the plaintiff was handed a termination letter providing him “12 months working notice of termination of his employment with High Strength.”

What happened next, according to the Court:

Mr. Rowley continued to work for High Strength until October 5, 2009, when he announced that he was leaving High Strength effective immediately to become sales manager at Quinton Steel, another company in the steel business.  Mr. Rowley’s compensation in his new position was less than he would have received had he stayed with High Strength for the balance of the notice period.  Most significantly, although his base salary at Quinton Steel was higher than it was at High Strength, no amount was payable to him by way of commission.

He sued, and alleged that the Company’s conduct both prior to and during the termination amounted to a constructive dismissal, that he was entitled to 15 months notice or pay in lieu thereof, and he claimed the difference between “his expected compensation at High Strength and the compensation he actually received at Quinton Steel for the remaining 13 months of the notice period after his departure from High Strength.”  He also claimed other damages.

The Company argued:

1. he was not constructively dismissed as he had been given 12 months advance notice of the termination of his employment
2. he failed to mitigate his alleged damages by remaining in the employ of the Company for the balance of the notice period provided to him.  He acted unreasonably by quitting to accept the lower paying job with Quinton Steel.

The Court dismissed his claim.

It provided a really excellent, and succinct, definition of constructive dismissal:

Constructive dismissal occurs when an employer unilaterally makes a fundamental or substantial change to specific terms of an employment contract without providing reasonable notice of that change Constructive dismissal also occurs where the employer’s conduct amounts to an effective repudiation of the entire employment relationship, rather than a change in specific terms of the employment contract.  Such repudiation occurs where the employer’s conduct creates a hostile work environment which renders the employee’s continued employment intolerable.  Each constructive dismissal case must be decided on its own facts.  The test for whether the employer’s conduct amounts to constructive dismissal is an objective one, considered from the perspective of a reasonable person in the same situation as the employee.

After reviewing the evidence, and the conflicts in the evidence, the Court held that:

[the plaintiff]  has not established that the conduct of High Strength’s principals, taken as a whole, was likely to cause a reasonable person in the same position as Mr. Rowley to find that continued employment with High Strength was intolerable, which would have allowed Mr. Rowley to treat the employment relationship as at an end.

While not necessary, the Court nonetheless went on to consider damages issues and the duty to mitigate.  Again, the following succinct summary of the law of mitigation was set out by the Court:

Consistent with the principles set out by the Supreme Court of Canada in Evans v. Teamster Local Union No. 31, the question to be determined is whether a reasonable person would have remained at High Strength for the balance of the notice period, taking into account the critical element that an employee is not “obliged to mitigate by working in an atmosphere of hostility, embarrassment or humiliation”.

In the circumstances of this case, the Court felt that the plaintiff should have remained with the High Strength on the through the balance of the working notice period provided to him.  His working conditions were not substantially different than previously, there was no acrimony and it was conceded that “he was not being treated in a demeaning or humiliating manner”.

The case is helpful in understanding what is (and is not) a constructive dismissal, the issue of when and employee is required to remain in a position, even in the face of a constructive dismissal, and the consequences and risks of “quitting and suing”.