In this case, Potter was appointed by the defendant as its
executive director for a seven-year term.
During the first half of the term the relationship between the
parties deteriorated and they began to negotiate a buy-out. Potter
became ill before the negotiation was completed. Just before he
returned to work, the Commission suspended him indefinitely with
pay and delegated his powers and duties to another person. At the
same time, it wrote to the Minister of Justice recommending that
his employment be terminated for cause. It refused to give Potter
any clear reason for the suspension.
Potter claimed that he had been constructively dismissed and
sued. He lost at trial and at the Court of Appeal.
The Supreme Court of Canada had a completely different view and
allowed the appeal.
The Supreme Court of Canada pointed out that in order to find
that a constructive dismissal has taken place, the court must first
identify an express or implied term of the contract that has been
breached. The court will then determine whether or not that breach
was sufficiently serious to constitute a constructive dismissal.
The point of the exercise is to determine whether the
employer's conduct shows that it does not intend to be bound by
the employment contract any longer.
The primary burden is on the employee to establish constructive
dismissal but where an administrative suspension is at issue, as in
this case, the burden will shift to the employer to show that the
suspension was reasonable or justified. If the employer cannot do
so, a breach will have been established and the employee will then
have to satisfy the court that the breach substantially altered an
essential term of the contract.
In this case, the contract had no express provision for a
suspension. The Commission did have an implied authority to relieve
Potter from his duties provided that it could show a business
justification for doing so. The Commission could not show a
business justification, for at least two reasons. Firstly, Potter
was never given any reason for his suspension. To the court, an
administrative suspension cannot be justified without basic level
of communication with the employee. Secondly, the Commission's
claim that the suspension was simply to facilitate a buy-out was
undercut by its own conduct, namely its letter to the Minister
recommending a termination, the fact that Potter was replaced
during a suspension period, and the fact that the suspension was
As a result, the unilateral suspension constituted a breach and
it was reasonable for Potter to perceive the breach as a
substantial change to his contract. There had been a constructive
dismissal and Potter was entitled to damages.
This case is a useful reminder to employers who are under the
impression that suspensions are a viable alternative to outright
terminations. If a suspension is merely a preliminary step towards
a termination, which an employer chooses to take in the hope that
the employee will simply get the message that is intended to be
sent and resign, the employer is taking a risk that might not be
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Unfortunately, reasonable accommodation for employees in the workplace continues to be the source of significant litigation and even today we continue to see outrageous examples of employers behaving badly.
We are now beginning to see reported cases involving charges and subsequent fines laid against employers for failing to provide information, instruction and supervision to protect a worker from workplace violence.
On October 13, 2016, the Supreme Court of Canada denied leave to appeal an Ontario Court of Appeal decision which ordered an employer to pay a former employee 37 months of salary and benefits following termination.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).