The employment relationship can be complicated at times. The general rule is that an employer contracts an employee for an indefinite period of time to complete specific work and will be paid accordingly for the work completed. This is how the majority of society operates within their professional lives
1. What happens when an employer opts to make changes?
2. What happens if the employee does not agree with the changes made?
3. What happens if there are substantial changes to the fundamental terms of said relationship?
The answer can be constructive dismissal, an indirect form of termination.
The case of Holm v Agat Laboratories Ltd, 2018 ABCA 23 (CanLII) http://canlii.ca/t/hq0n3 relates to constructive dismissal, reasonable notice, aggravated damages, punitive damages and enhanced costs.
The Plaintiff, Mr. Holm, was employed with the Defendant and from the beginning had issues with the company failing to define his role and responsibilities. Over the course of his employment the issues worsened and the Plaintiff’s salary was cut by $80,000, his car allowance was taken away, he was moved to a smaller office and was forced to report to someone who had previously reported to him. All of the changes came without any notice or consent by the employee. The company said there had been concerns with performance, however the Plaintiff’s role was never defined and he was not provided with any opportunity to excel.
The Defendant attempted to argue that there was no constructive dismissal or alternatively there was cause to terminate his employment. The Defendant also attempted to rely on its contractual notice period restricting him to the provincial legislative minimums.
The Plaintiff was found to have been constructively dismissed, as objectively an employee in his position would have felt that the essential terms of his employment had been substantially changed.
The Plaintiff further alleged that as a result of this treatment he suffered tremendous stress which negatively impacted his life. The Plaintiff relied on the company’s actions relating to his demotion and a threat made by the Chief Operating Officer blaming him for an incident that resulted in a safety breach.
The Plaintiff sought aggravated damages for the manner in which the company handled his demotion. It was found that the actions of the company amounted to a breach of the obligation of good faith and fair dealing and supported an award of aggravated damages.
It was also found that he had suffered mental distress due to the manner of his dismissal and the unproven allegations that he had breached fiduciary and other obligations. Most significantly the company pretended to attempt to hold him responsible for a safety incident when the company had previously reprimanded and terminated another employee for their involvement. It was apparent the company brought this allegation forward to increase his anxiety and to deter him from pursuing his legal rights.
In a similar example, in Lalonde v. Sena Soli Waste Holdings Inc., 2017 ABQB 374, it was determined that the company’s unsubstantiated allegations of theft amounted to a breach of the obligation of good faith and fair dealing and supported the award of aggravated damages. Again, the Court determined that the conduct caused during the termination meeting had a severe negative impact on the Plaintiff.
These types of cases should be a warning to employers. Terminations are typically compensated for by wrongful dismissal damages, or in other words an amount of notice, but when the manner in which a termination takes place unnecessarily harms employee the Court is willing to award more damages to compensate for this. It is important that terminations are carried out in good faith to minimize the harm. Bad faith conduct by the employer will inevitably result in courts penalizing the employer and awarding additional damages.
If you have questions about your termination or if you are an employer looking for information on how to properly terminate an employee, call Monkhouse Law today for a free consultation.