MT2 - Constructive Dismissal/Employee Resignation Flashcards
What are the two main types of Constructive Dismissal?
Constructive dismissal occurs when an employer’s behavior makes continued employment intolerable or when the employer commits a substantial breach of the contract.
What test determines if an employee can claim Constructive Dismissal?
The test examines whether the employer breached an explicit or implied contract term, whether a reasonable employee would consider the breach substantial, and whether the employee treated the contract as terminated by quitting without condoning the breach.
What employment changes can lead to a claim of Constructive Dismissal?
Unilateral pay cuts, unreasonable job relocation, significant job duty changes such as a demotion, unpaid suspensions or layoffs without contractual basis, and workplace harassment.
What options does an employee have after experiencing Constructive Dismissal?
An employee can condone the changes by continuing to work, treat the contract as terminated by quitting and suing, or protest the changes by formally objecting and attempting to enforce the original contract terms.
When does an unpaid temporary layoff not amount to Constructive Dismissal?
An unpaid temporary layoff does not amount to constructive dismissal if the employment contract explicitly allows it, if it is permitted under a collective bargaining agreement, or if it is temporary and follows statutory guidelines.
What determines whether a resignation is voluntary or forced?
A resignation must be clear and unequivocal. If an employee is forced to resign under pressure, such as being given the choice to quit or be fired, it is not considered a voluntary resignation.
What are the key factors in an employee’s duty to mitigate damages after wrongful dismissal?
The employee must seek comparable employment but is not required to accept a demotion, relocate unreasonably, or return to a toxic work environment.
What are the three types of damages an employee can claim for wrongful dismissal?
Compensatory damages cover lost wages and benefits during the notice period. Aggravated damages compensate for mental distress caused by bad-faith termination. Punitive damages are meant to punish the employer for egregious misconduct.
What is the minimum statutory notice period for termination in Saskatchewan for an employee with three to five years of service?
Four weeks.
What is the minimum notice period for a mass termination of seventy-five employees in Saskatchewan?
Eight weeks.
In which jurisdictions are non-unionized employees protected from dismissal without just cause?
Federal, Nova Scotia, and Quebec.
What did the Supreme Court decide in Wallace v. United Grain Growers regarding bad-faith dismissals?
The Court ruled that employers who dismiss employees in bad faith, such as through misleading or humiliating tactics, must extend the reasonable notice period. This created what became known as ‘Wallace damages.’
What key principle from Wallace v. United Grain Growers was later overturned?
The automatic extension of the reasonable notice period for bad-faith terminations was overturned in Honda v. Keays (2008), which required employees to prove actual harm instead of automatically receiving extended notice.
How did Honda v. Keays change the legal approach to bad-faith terminations?
The Supreme Court ruled that employees must provide actual evidence of mental distress caused by the employer’s bad-faith termination to receive aggravated damages. This replaced the Wallace approach of automatically extending notice periods.
What must an employee prove to receive aggravated damages under Honda v. Keays?
The employee must provide medical or other credible evidence that the employer’s termination directly caused mental distress or harm.
What are the Bardal factors, and why are they important in wrongful dismissal cases?
The Bardal factors determine the appropriate length of reasonable notice and include considerations such as the employee’s age, length of service, nature of their position, and availability of similar employment.
How do the Bardal factors impact notice periods?
Older employees, long-term employees, and those in specialized positions receive longer notice periods since finding comparable employment is more difficult.
What precedent did Farber v. Royal Trust establish regarding constructive dismissal?
The Supreme Court ruled that a fundamental unilateral change to an employee’s contract by the employer, such as a significant demotion or salary cut, can constitute constructive dismissal.
What test did Farber v. Royal Trust establish for constructive dismissal?
A reasonable employee test: Would a reasonable person in the employee’s position consider the change as forcing them to resign?
How did Machtinger v. HOJ Industries impact employment contract termination clauses?
The Court ruled that if a termination clause in an employment contract provides less than statutory minimum notice, the entire clause is void, and common law reasonable notice applies instead.
Why is Machtinger v. HOJ Industries important for employers drafting contracts?
Employers must ensure termination clauses meet or exceed statutory minimums, or else they risk having the entire clause invalidated.
Sarah’s employer cuts her salary by 18% without prior notice or consultation. She continues working for three months but then decides to sue for constructive dismissal. What legal arguments can she make, and what might be the counterargument?
Sarah can argue that the unilateral salary reduction constitutes a fundamental breach of contract, following the precedent set in Farber v. Royal Trust. However, the employer may counter that she condoned the change by continuing to work for three months.
John is called into a meeting and told, ‘You can either resign today, or we will fire you tomorrow.’ He resigns and later claims wrongful dismissal. What legal principle applies?
John’s resignation was not voluntary but forced, meaning it could be considered a wrongful dismissal. Courts have ruled that an ultimatum like this invalidates the resignation.
Lisa is wrongfully dismissed and receives a job offer at a lower salary in a different city. She declines the offer and sues for damages. How will the court assess her duty to mitigate?
The court will determine whether the new job was reasonable. If relocating or accepting lower pay is unreasonable given Lisa’s circumstances, she may not be required to take the job. However, if the job is similar and within a reasonable distance, the court may reduce her damages for failure to mitigate.
A company in Saskatchewan lays off 15 employees in a single month. The employees claim the employer failed to meet the legal requirements for group termination notice. What legal obligations does the employer have?
Under Saskatchewan law, any termination of 10 or more employees within a 4-week period requires additional notice to the employees, any unions, and the Minister of Labour Relations. Failure to comply could result in penalties or legal challenges.
Raj is placed on unpaid suspension for two months due to an internal investigation. His contract does not mention suspensions. Can he claim constructive dismissal?
If the contract is silent on suspensions, Raj could argue that the unpaid suspension constitutes a fundamental breach of contract. However, if the employer can justify the suspension as part of a legitimate investigation, it may be considered reasonable.
What is the difference between an aggravated damages claim and a punitive damages claim in wrongful dismissal cases?
Aggravated damages compensate for emotional distress caused by bad-faith termination, while punitive damages are intended to punish the employer for egregious misconduct.
How does the concept of reasonable notice differ between common law and statutory requirements?
Common law reasonable notice is determined by Bardal factors, while statutory notice is based on employment standards legislation and is typically shorter.
An employer terminates an employee on a fixed-term contract six months before the contract’s end. What damages might the employee claim?
If there is no termination clause allowing early dismissal, the employee may be entitled to the remaining six months of salary, as fixed-term contracts do not require mitigation of damages.
What is Constructive Dismissal?
Constructive Dismissal occurs when an employer’s actions or a breach of a substantial contract term make continued employment intolerable, effectively forcing the employee to resign.
What happens if an employee treats a minor contract violation as Constructive Dismissal?
The employee has legally resigned rather than being constructively dismissed.
What are some common situations that amount to Constructive Dismissal?
Change in compensation and benefits, relocation, significant job duty changes, unpaid suspension, harassment, or temporary layoffs without contractual basis.
When do unilateral pay cuts amount to Constructive Dismissal?
There is no fixed percentage, but a salary reduction of more than 15% is typically considered a breach of contract.
Do bonus and incentive plan reductions count as Constructive Dismissal?
No, if bonuses and incentives are not guaranteed and depend on various factors, a reduction does not necessarily constitute a breach.
What is the legal test for determining whether a relocation is reasonable?
The court considers whether the contract defines the work location, whether the employer has a legitimate business reason, the type of job, industry standards, and whether relocation would result in significant hardship.
Do job reassignments amount to Constructive Dismissal?
Reassignments made in good faith for business reasons and that do not result in demotion are generally considered reasonable. However, demotions, even without salary reduction, can be considered constructive dismissal.
What is the difference between an Unpaid Temporary Layoff and an Unpaid Disciplinary Suspension?
An unpaid temporary layoff amounts to constructive dismissal unless explicitly allowed in the employment contract or collective bargaining agreement. An unpaid disciplinary suspension can amount to constructive dismissal unless the employer has an express or implied right to impose it.
What is the difference between Paid Administrative Leave and an Unpaid Suspension?
A paid administrative leave is usually temporary and tied to an investigation. It is not considered Constructive Dismissal if it is reasonable and in response to a legitimate business interest.
What three actions can an employee take after Constructive Dismissal?
The employee can condone the change by continuing work, treat the contract as terminated and sue, or formally protest and attempt to enforce the original contract terms.
Why do courts rarely order reinstatement after wrongful dismissal?
The employment relationship is often considered irreparably damaged, and reinstatement is not practical in most cases. However, it is more common in unionized workplaces.
What is the employee’s duty to mitigate damages after a wrongful dismissal?
The employee must actively seek new employment and accept a reasonable job offer. They are not required to accept a demotion or a job that requires significant relocation.
Does an employee have to return to the previous employer if offered a job after wrongful dismissal?
Generally, no. Courts consider whether returning would be reasonable based on circumstances, trust, and working conditions.
What are Compensatory Damages?
These damages compensate for lost wages and benefits during the notice period and are subject to the employee’s duty to mitigate.
What are Aggravated Damages?
These damages compensate for emotional distress caused by the manner of termination and do not require mitigation.
What are Punitive Damages?
These damages are meant to punish the employer for egregious conduct and are not intended to compensate the employee.
What are some examples of bad-faith conduct that could lead to Aggravated or Punitive Damages?
Insensitive communication of termination, harassment, refusal to pay statutory benefits, false accusations of misconduct, dragging out litigation, or threats of counterclaims.
What is the duty to mitigate in wrongful dismissal cases?
The employee must seek comparable employment but is not required to take a job that is unreasonable or significantly inferior.
What is the minimum statutory notice period for termination in Saskatchewan?
One week for employees with less than one year of service, increasing with years of service up to eight weeks for 10+ years.
What qualifies as a Group Termination in Saskatchewan?
A termination of 10 or more employees within a four-week period.
What is Severance Pay, and when is it required?
Severance pay is an additional payment beyond the notice period, required only in the federal jurisdiction and Ontario, subject to service length and employer payroll size.
What is the difference between Severance Pay and Termination Pay?
Termination pay is given in lieu of notice, while severance pay is an extra payment based on years of service and only required in specific jurisdictions.
What is Unjust Dismissal protection, and where does it apply?
It prevents employers from terminating employees without just cause. It applies in federal jurisdiction, Nova Scotia, and Quebec but not in Saskatchewan.
