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Car company’s classic case of constructive dismissal

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For an employee to successfully argue that she has been constructively dismissed is an uphill battle. The onus is on her to show that a fundamental term of the contract of employment has been breached, she has not condoned that breach, and in walking out the door, she has not failed to mitigate her damages. These inherent difficulties in asserting constructive dismissal mean that many employees lose their cases, or, are dissuaded by employment lawyers to initiate them at all.

However, a recent case from the Ontario Superior Court, Janice Wiens v. Davert Tools Inc., 2014 CanLII 47234 (ON SCSM) is a good example of an employee overcoming these obstacles and winning.  Indeed, it is a classic case of constructive dismissal and is illustrative of what employers should not do when managing lay offs and other workplace behaviours even when the employer is in dire financial straits.

The employee in question, Janice Wiens, worked at Davert Tools Inc., as the Quality Control Manager. She earned slightly more than $50,000 a year.  Davert Tools was in the automotive business, and it was hit very hard by the recession of 2008.  According to the owner, Robert Collier, he was uncertain whether the company would survive at all.

In a response to its shrinking business, Davert laid off Ms. Wiens at the end of November 2010.  This lasted until January 2011. Her benefits were continued during this time.

Ms. Wiens was again laid off in May of 2011. She received a letter saying that the lay off was on a temporary basis. The Record of Employment she was provided said that the date of recall was unknown. Thereafter, she was recalled to work on a day-by-day basis based on the employer’s needs. Her benefits terminated in July 2011.

On August 18, 2011, Ms. Wiens was asked to return to work, and she was told by Mr. Collier that he would like to hire her back at some point, but he could not give her assurance when she might be called back. He asked her to think about it and speak to him the next day.  Ms. Wiens told him the next day that she would not be back, because she thought the situation was very grim and she didn’t see a future there. She then filed for employment insurance.

There were some other workplace events that Ms. Wiens found troubling. The owner of the company, Robert Collier had yelled at her in the inspection department because of quality control issues, and that this was done in front of other employees.  Five years prior to being laid off, he called her into his office and asked her to sit on his knee, and he slapped her bottom.  At that time, she objected and he never repeated the behaviour.  The company changed to whom she reported and she was “pushed out” of the management team as a result.

Ms. Wiens argued that the she had been constructively dismissed. The company claimed that she had quit and that she had been properly laid off in accordance with the Employment Standards Act.

The judge concluded that the aggregate effect of the lay offs and the yelling and the change in the reporting relationship had indeed triggered a constructive dismissal.  Ms. Wiens, who had worked for the company for 8.5 years, was entitled to 8.5 months of notice.

It is important for employers to remember that one change in the employment relationship may not trigger a constructive dismissal. This same change, however, when accompanied by other changes, may. Moreover, changes in reporting structures, particularly when someone’s power and influence is diminished, may leave an employer exposed to liability, as will lay offs, even when they are in accordance with the technical requirements of  the Employment Standards Act. In addition, while something like yelling may not have contributed to a successful constructive dismissal case in the past, in our post-Bill 168 environment, it can now.

As a last word, employers should note that this decision is of the Small Claims Court.  In 2010, the upper limit of this Court was increased to $25,000 from $10,000. As a result, we have seen a steady stream of wrongful dismissal and constructive dismissal cases come from here. Employers need to be prepared for a different type of advocacy in the Small Claims Court. Plaintiffs are often unrepresented and the procedural and evidentiary standards are more informal. Sometimes the judge is a justice of the peace or a lawyer appointed for this specific task.  There are no examinations for discovery, and limited pre-trial document disclosure, so it is “on your feet” justice oftentimes.

Janice Rubin