Canada: How A Respectful Workplace Can Reduce The Risk Of A Successful Constructive Dismissal Claim

Labour, Employment and Human Rights Bulletin
Last Updated: May 2 2019
Article by Matthew Larsen

Generally, when employees decide to leave their jobs, they are considered to have resigned. But, if employees leave their jobs because the employer substantially changed essential terms of their employment contract, they are considered to have been constructively dismissed. One way an employer can constructively dismiss an employee is by permitting an abusive, intolerable work environment.

How can an employer properly address workplace conduct to minimize the risk of a constructive dismissal claim? This is the issue that was addressed by the BC Supreme Court in Baraty v. Wellons Canada Corp., 2019 BCSC 33.

What happened?

The claimant, was employed by Wellons Canada Corp. ("Wellons") as the head of the estimation department. The estimation department had only two employees, the Claimant and a subordinate.

The relationship between the Claimant and the subordinate was acrimonious – to put it mildly. Over time, the Claimant went to management, accusing the subordinate of doing outside work on company time, insubordination, physical intimidation, verbal abuse and harassment.

Wellons investigated the Claimant claims and found that many of the Claimant accusations were unfounded. The investigation concluded that in one incident the subordinate directed profanity towards the Claimant. Wellons disciplined the subordinate for the use of profanity.

The investigation also concluded both men were to blame for the poor working relationship. Wellons brought in a coach in an attempt to improve the working relationship between the Claimant and the subordinate. The relationship did not improve. the Claimant subsequently petitioned Wellons to terminate the subordinate for cause. Wellons refused.

A new General Manager explored the possibility of integrating the estimations and sales departments. On the basis of these discussions, the Claimant became convinced that a decision had been made to demote him. In fact, no final decision had been made regarding the integration of the departments. Further, integration would not have included a demotion of the Claimant or any change to his remuneration, title, or core responsibilities.

Frustrated by management's failure to discipline the subordinate and convinced that Wellons had decided to demote him, the Claimant resigned and sued for constructive dismissal.

Court's decision

There are two branches, or general categories, of constructive dismissal. First, a single unilateral act that breaches an essential term of the contract. Second, a series of acts that when taken together show the employer no longer intends to be bound by the contract. the Claimant claimed both branches applied. The court concluded there was no constructive dismissal on either branch.

A claim of constructive dismissal was premature because no decision had been reached to integrate estimations and sales. Further, integration would not have changed the Claimant remuneration, title and core responsibilities, and would not have resulted in a constructive dismissal of the Claimant.

There was no intolerable work environment which gave rise to constructive dismissal. The test for an intolerable work environment is a high one: whether a reasonable person in the circumstances should not be expected to persevere in the employment. An individual's subjective perception of the work environment will not be enough to establish constructive dismissal. Unfriendliness, confrontations between co-workers or even some hostility and conflict will not amount to constructive dismissal where the employee is still able to perform his or her work.

The court noted that this was not a case of repeated insulting behaviour, nor was such behaviour tolerated or condoned by management. The employer treated the complaint seriously. It disciplined the subordinate for using profanity and arranged for a career coach to assist the Claimant and the subordinate. The court concluded that the subordinate conduct did not reach the level where a reasonable person should not be expected to persevere in the employment.

Lessons for employers

This case not only offers a useful summary of the law on poisoned workplaces, but it also offers employers in all Canadian jurisdictions several practical suggestions on how to reduce the risk of a successful constructive dismissal claim:

  • Implement a respectful workplace policy. This may be required by legislation in some jurisdictions. It also shows a commitment to a respectful workplace and may help to defend against a constructive dismissal claim, such as that made by the Claimant.
  • Treat complaints seriously. If the employer receive complaints from an employee it is important to take the complaints seriously and investigate.
  • Take action where there is wrongdoing. If an investigation reveals that an employee has engaged in behaviour that creates a hostile work environment, take steps, including discipline, to make clear that such behaviour will not be tolerated.
  • Reaffirm the employer's commitment to a respectful workplace. When complaints arise, make clear to all affected parties that the employer desires to ensure a respectful workplace.
  • Exercise care when modifying conditions of employment. Employers do have, in certain circumstances, the managerial authority to modify conditions of employment. However, modifications must always be analyzed in their particular context in order to ensure that they do not trigger a constructive dismissal. It is prudent to obtain legal advice as to whether modifications substantially alter the essential terms of their employment.

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.

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