CONSTRUCTIVE DISMISSAL TOOK PLACE EVEN THOUGH EMPLOYEE RESIGNED

Allen had been working for sixteen years as a Chemical Lab Technician when he was told that his position was being eliminated but he could have a production job if he wanted. 
 
As a Chemical Lab Technician he spent twenty-five percent of his time doing hands-on labour and the rest dealing with technical and mechanical issues.  He earned $20 an hour.  The production job he was offered paid $14 an hour and was one hundred percent labour involving significant lifting, bending and other more strenuous activities.  In the new position he would lose some of his benefits coverage.  Allen was told that for the first five months of the new job he would be paid his old salary. 
 
Allen was married and had three dependent children and against his better judgement took the new job.  Within a few days of starting the new job, he was finding that the work was so strenuous it was aggravating an old back injury and he had to go and see a chiropractor twice during those six days.  When he complained to his supervisor about the effect the new position was having on his back he was told he would get used to it.   After six days on the new job, without consulting a lawyer, he told the company he was quitting and signed a note indicating that he was resigning effective two weeks later.
 
Apparently Allen thought better of his resignation and filed a complaint with the Ministry of Labour for termination and severance pay. 
 
Like the courts, the Employment Standards Act recognizes the concept of constructive dismissal.  If an employer significantly changes the terms of employment without notice and without the employee’s consent, it is called a constructive dismissal.  It is a termination without anyone saying "You're fired". 
The original investigating officer found that Allen had been constructively dismissed and ordered the employer to pay him $10,000.  The employer appealed that award and the matter ended up before an adjudicator at the Ministry of Labour in Toronto. 
 
The fact that the employer appealed the decision is the first surprising aspect of this case.  There are many circumstances where it is not clear whether the changes to the terms of employment are severe enough to be called a constructive dismissal.  This was not one of those circumstances.  Allen's wage was dropped by thirty percent and he was demoted.  That is as clear as constructive dismissals come.  The next surprise is that the Ministry of Labour adjudicator actually agreed with the employer.  The adjudicator took a very simplistic approach to the issue and decided that since Allen had signed a letter of resignation, he did not have to think about whether Allen had been constructively dismissed before the resignation was signed. 
 

The reality is that if Allen had consulted an employment lawyer before he resigned he would have been told not to use the words "resign" or "quit". He would rather have been told to indicate that he was leaving as a result of a constructive dismissal.  The fact that Allen didn't know the particular words to use, however, is almost irrelevant.  Regardless of what Allen said in his note, the issue was still whether Allen was constructively dismissed or not.  Just because Allen didn't understand the concept of constructive dismissal when he left did not mean he was not entitled to termination and severance pay under the Employment Standards Act
 
The adjudicator's decision was appealed.  When that happens it is called a "Judicial Review".  The matter was put before three judges of the Divisional Court in Ontario.  Thankfully, they understood the issues clearly and found that Allen had been constructively dismissed.  The Divisional Court judges were critical of the Ministry of Labour adjudicator for having decided that since Allen signed a resignation letter the issue of constructive dismissal did not have to be considered.  The Court found that it was perfectly clear that Allen had been constructively dismissed when he was moved to the new job.  It further found that just because Allen tried out the job for six days before leaving did not mean that he had condoned or accepted the change in his employment terms.  If Allen had done this job for three months and then tried to say he was constructively dismissed, he likely would have been out of luck.  Three months of silence and working in the job would have been interpreted by the court as an acceptance of change to the terms of employment.  The court, however, found that Allen had not waived his right to consider himself constructively dismissed by working at the job for six days.
 
There is a lesson for employers in this case:  If an employer has recently changed significant terms of the employment relationship, just because an employee leaves after signing a letter of resignation does not mean the employer is off the hook. 
 
There is also a lesson for employees here:  If the terms of your employment are changed significantly you can often try out the new job for a short period of time without being deemed to have irrevocably accepted the change. 
 
Finally, if the employee does decide to leave, they should never sign a note saying they resigned or quit.  Although Allen was able to succeed in this claim despite having signed such a note, he would not have faced nearly as long a battle if the he had never used the word resign.
 
As published in the Hamilton Spectator, February 24, 2003
 
Ed Canning
Ed Canning
P: 905.572.5809
ecanning@rossmcbride.com