TRYING TO FORCE RESIGNATION CAN LEAD TO A CONSTRUCTIVE DISMISSAL

Karen worked for a lumber processing and transportation company for twelve years.  Although she started by doing accounting, over the years her job changed.  By the end, the accounting functions only took twenty-five percent of her time and the remainder was taken up by billing, production scheduling, customer relations and the supervision of one other office person.  She spent most of her day in the office and very little time in the lumber yard.  She was well regarded and viewed as the second-most senior person at the company.
 
By the end of her employment she was referred to as the office manager and worked a normal business day from 8:30 a.m. to 5 p.m. to accommodate her daycare schedule for her children. 
 
In the twelfth year of her employment, relations with her boss, Mr. Bell, began to decline.  They had a strong difference of opinion over which staff would be laid off as a result of a decline in business and Karen's entitlement to 34 days of earned but unused vacation.  One day, Mr. Bell offered Karen $8,000 to resign her employment.  Mr. Bell told Karen that things were not working out and the money would be paid to her to go away.  He told her to take some time off to think about it and she went home.
 
Over the next four days, Mr. Bell hired a new employee to carry out Karen's accounting functions and installed that employee in Karen's office.  When Karen met with Mr. Bell four days after she had been sent home he told her she had not been fired.  It was a take it or leave it offer.  Karen told Mr. Bell that in that case she would be in to work the next day.  Mr. Bell told her that was fine but there were going to be drastic changes, that her job would be changing and she would have to change as well.  He tried to paint the work environment as uninviting as he could and then told her that if that was the kind of place she wanted to work in to come on back.
 
When Karen got to work on Monday her reserved parking spot had been moved.  She immediately received a warning letter detailing her performance deficiencies and advising her that if they continued she would be fired.  She was also told that as of one week later her hours were being changed to 7 a.m. to 3:30 p.m which Mr. Bell knew would not work with her child care arrangements.  The letter also indicated that her responsibilities were being changed and she would be spending most of her day outside in the lumber yard.
 
To add insult to injury, there was a new employee sitting in Karen's office and no arrangements had been made for a work station for her.
 
A few days later Karen told Mr. Bell that she would not be returning to work as she viewed herself as having been constructively dismissed.
 
Karen sued for constructive dismissal and won.  The court found that the effect of all of these changes to Karen's employment was that she had been terminated.  The terms of her employment had been fundamentally changed without her consent and without notice.  The court found that Karen was entitled to thirteen months' pay in lieu of notice. 

 
The judge also found that the totality of Mr. Bell's treatment of Karen constituted a breach of his obligation as an employer to treat Karen in good faith with respect to the termination of her employment.  The court found that Mr. Bell's biggest crime was not admitting that he was firing Karen when in fact that is what he had every intention of doing.  He did not want to say the words out loud in hope of saving himself some money but was nonetheless trying to provoke her to leave.  Karen's thirteen months' notice was increased to fifteen months as a result of the way she was treated at the time of her termination.
 
Some employers mistakenly believe that they can put the "squeeze" on an employee they want to terminate and provoke a resignation rather than pay an appropriate severance package.   The problem is, an employer who is caught obviously putting the squeeze on an employee can end up paying far more money than if it had just terminated the employee and made a reasonable severance offer in the first place.
 
After her twelve years of service in a lower management position, if Karen had been offered eight or nine months' pay in lieu of notice, she probably would have taken it.  I suspect that Mr. Bell only sought the advice of an employment lawyer after he'd already made a mess of things.
 
As published in the Hamilton Spectator, March 10, 2003
 
Ed Canning
Ed Canning
P: 905.572.5809
ecanning@rossmcbride.com