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Poor treatment is constructive dismissal

Table of contents
Message from the Chair
Supreme Court rules Retired Judges not Qualified as Arbitrators
PIPA Alberta and British Columbia
Labour arbitrators’ jurisdiction
Québec gets tough on workplace harassment
Qualified privilege and reference checks: is an employer protected from a defamation action?
Chronic absenteeism may have to be tolerated
Poor treatment is constructive dismissal
Frustration of the employment contract
Entitlement to employment benefits for off-work employees
Sawmills and safety-sensitive positions
Shiftwork maladaption syndrome – an update
Anti-union animus passé?
Arbitrarial jurisdiction Re: management misconduct
Summaries of CLE Papers
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Poor treatment is constructive dismissal

Christopher M. Andree
Crawford, Chondon & Andree LLP, Brampton

Relying upon the oft-quoted decision of the Supreme Court of Canada in Wallace v. United Grain Growers, [1997] 3 S.C.R. 701, the Ontario Superior Court of Justice recently decided in Saunders v. Chateau Des Charmes Wines Ltd., [2002] O.J. No. 3990 that a senior manager, who had been subjected to derogatory and demeaning conduct at the hands of the owner of his employer, had been constructively dismissed. This case follows the earlier decision of the Ontario Court of Appeal in Shah v. Xerox Canada Ltd., [2000] O.J. No. 849 holding that constructive dismissal does not necessarily require a particular breach of a fundamental term of the employment contract, but may be found where the circumstances establish that the employer has, without cause, repudiated the employment relationship by its conduct.

A workplace environment that is characterized by an atmosphere of hostility, embarrassment or humiliation has been held to amount to one that permits an employee to resign and seek damages for constructive dismissal. The Court in Saunders relied on the following as examples of conduct which was deemed to be unacceptable:

  • hostile, aggressive, profane, rude, demeaning, abusive and intimidating conduct directed toward the employee;
  • a management style occasionally punctuated with anger and profanities; and
  • discipline carried out in a manner which is demeaning.

The Court confirmed that employees are entitled to be treated with civility, decency, respect and dignity, particularly in the context of discipline. The test appears to be whether the employer’s treatment of the employee was of sufficient severity and effect to constitute a repudiation of the employment relationship.

Another important finding of the Court was that otherwise inadequate performance can become exempt from discipline, if the negative effect of the manager’s conduct impacts on the employee’s ability to concentrate and, thereby, improve his/her performance. In such a case, the discipline may be the cause of the poor performance.

In Saunders, the Trial Judge also found that the employee has no obligation to advise the employer that the conduct is unacceptable. It clearly stated the onus is not on the “vulnerable employee” to confront the employer about his behaviour. Rather, the Court placed the onus on the employer to identify the problems in the workplace and take appropriate steps.

In the somewhat similar case of Proctor v. Sharp’s Corner Drug Store Ltd., [2002] N.B.J. No. 291 (Q.B.) the court held the employer liable for wrongful dismissal, notwithstanding the employee’s repeated indications over several months of his intention to resign due to a strained relationship with the owner; the statement, at the time he left his employer, “I can’t take anymore of this. I’m out of here,” and his subsequent confirmation to the employer of his intention not to return unless changes were made by the employer. The Court held not that the employer was not entitled to rely upon these actions as confirmation of the employee’s resignation, but was instead obligated to interpret these actions as indications that the employee needed medical attention.

While placing the onus on employers to identify mistreatment of employees may be an acceptable position in the context of objectively inappropriate and overly severe conduct, in less obvious cases it takes away any responsibility from the employee to indicate to the employer that the management style is having a demotivating or debilitating result. When coupled with the possible inability to discipline the employee for poor performance due to the effect of the discipline on the employee’s concentration, this approach will make it extremely difficult for managers to effectively follow the principles of progressive discipline. It will also hamper their ability to identify which employees react to which kinds of motivation and to apply different types of motivation to different employees, an approach advocated by many management and leadership programs.

In the end, Saunders, a 39-year-old sales manager with almost 10 years service was awarded 12 months’ pay in lieu of notice. The Court went on to award an additional three months’ remuneration in lieu of notice based upon the “Wallace-type” conduct to which the employee was subjected. It found that personal attacks using extremely antagonistic methods of expressing disagreement caused a significant amount of stress for the employee, including embarrassment and humiliation in front of his colleagues, and that the employer’s conduct fell under the “unfair dealing” portion of the test in Wallace.

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