Vitran employed Morgan as a dock supervisor for almost 25
years. In that capacity, Morgan had supervised 22 men on a
dock, sharing that responsibility with other dock supervisors.
Vitran then changed his job to "freight analyst", a
position created specifically for him, which was described by the
trial judge as a job that involved checking on two part-time
workers. She described the position as being of less
importance and prestige with very little supervisory function and
little opportunity to make decisions and exercise discretion.
As a result, the trial judge found that Vitran had altered the
essential terms of Morgan's employment in a substantial
Morgan left the company rather than accept the new position and
sued for damages for constructive dismissal.
He was successful at trial. The trial judge rejected
Vitran's argument at trial that a reasonable person in
Morgan's situation would have accepted the opportunity to
continue working at Vitran as a freight analyst, thereby mitigating
Vitran appealed, arguing both that there had been no
constructive dismissal and also that if there had been a
constructive dismissal, Morgan had acted unreasonably in refusing
to mitigate his damages by continuing to work at Vitran.
On the constructive dismissal issue, the Court of Appeal
referred to the state of the law as articulated by the Supreme
Court of Canada earlier this year in Potter v. New Brunswick Legal Aid Services
Commission and reiterated the two-part test for
constructive dismissal. Firstly, the court must determine
whether or not there has been a substantial alteration of an
essential term of the employment contract. Secondly, the
court must consider whether the conduct of the employer in making
that alteration would lead a reasonable person to conclude that the
employer no longer intended to be bound by the terms of the
In this case, the Court of Appeal agreed with the trial judge
that Vitran had indeed substantially altered the essential terms of
the employment contract and furthermore, that the circumstances
viewed objectively would have made it clear to any reasonable
person that Vitran no longer intended to be bound by the terms of
the employment agreement.
In essence, a demotion will constitute a substantial change to
the essential terms of an employment contract which will warrant
the finding of constructive dismissal if it can be reasonably said
that the employer simply does not want the employee around
anymore. The court agreed that this was the case with
On the mitigation point, the trial judge had dismissed
Vitran's argument because she found that Morgan had been
subject to an unfriendly work environment and that his personal
relationships with several of his superiors were acrimonious.
As a result, according to the trial judge, Morgan was justified in
walking out the door and starting this lawsuit.
There is well established Supreme Court of Canada case law on
the circumstances in which a dismissed employee must mitigate
damages by returning to work for the same employer. It is
clear that there is no such obligation where the work environment
is unfriendly, where the new position is of lesser importance than
the previous position and where the employee will suffer a loss of
dignity in the eyes of those who had previously worked under his
supervision. That was all true in this case.
Furthermore, as the freight analyst position had not been
posted, the court agreed that other employees would have known that
it was a position created especially for him because of perceived
ineptitude. The court also agreed that his personal
relationships with his supervisors were acrimonious in the sense
that no matter what he did, they continued to criticize him.
As a result, Morgan was justified in leaving rather than
accepting the demotion.
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