Deconstructing constructive dismissal: An analysis of Rampre v Okanagan Halfway House Society, 2018 BCSC 992
Tuesday, April 09, 2019 - Filed in: Court Cases
A recent B.C. Supreme Court decision provides a helpful refresher on the legal principles underpinning constructive dismissal.
The plaintiff, Ingo Rampre, worked for the defendant, the Okanagan Halfway House Society, for almost 23 years. In 2016, he alleged that he was constructively dismissed.
In 2015, the Society was experiencing ongoing financial difficulties and its leadership team made decisions about how to improve the organization's financial health. These included pay cuts for the management team and reductions in hours. In April 2015, the director approached Mr. Rampre, who was a supervisor, to alert him to the financial challenges and the changes the Society would have to make in the future. Mr. Rampre was 70 years old at the time and the director also inquired about any retirement plans he had. At the end of that meeting, the Society's director gave Mr. Rampre a letter advising him that effective September 2015, his position would be reclassified and his salary reduced.
The Society never implemented those changes and, in February 2016, the director wrote to Mr. Rampre stating that the changes were delayed and to take effect on April 1, 2016. Just one day before the changes were to have occurred, Mr. Rampre e-mailed the director and stated that he felt he had been constructively dismissed. As a result of this, the Society made no change to Mr. Rampre's wages, schedule or job classification and attempted to find a resolution with him, including by considering his desire to work part-time. After two meetings, Mr. Rampre sent another e-mail saying he would not be willing to work part-time and he found the work environment toxic. He demanded 23 months of severance.
In response, the Society revoked its proposed changes and urged Mr. Rampre to reconsider his resignation. Mr. Rampre maintained his position that he had been constructively dismissed. He declined to look for work after leaving the Society because he considered himself to have retired. He sued for damages for constructive dismissal.
Mr. Rampre's action was dismissed. At a summary trial, the Supreme Court made a finding that he had in fact voluntarily resigned and not been constructively dismissed.
In coming to this conclusion, Justice Weatherill identified that there were two questions which needed to be answered: the first was whether the plaintiff was constructively dismissed and, if so, the second was what flowed out of that dismissal in all of the circumstances.
In order to answer these two questions, Justice Weatherill provided a useful summary of the key principles in the law of constructive dismissal. He first identified the correct test to determine if a constructive dismissal has occurred. It is a two-pronged test which requires asking:
- Was there a unilateral change by the employer that constituted a breach of the employment contract and substantially altered an essential term of the contract?
- Did the employer engage in a course of conduct that would lead a reasonable person to conclude that the employer no longer intended to be bound by the terms of the contract?
Justice Weatherill highlighted the additional principles to be considered:
- Repudiation of an employment contract by the employer does not automatically terminate the contract but "confronts the employee with the choice to either affirm the contract and treat it as continuing or to accept the wrongful repudiation and treat the contract at an end".
- An anticipatory breach occurs when one party, through words or conduct, displays an intention not to be bound by the provisions of the agreement which require performance in the future.
- If the employee decides to treat the breach of the employment contract as constructive dismissal, the employee must communicate that decision to accept the contract repudiation in a reasonable time.
- The employer then has the opportunity to reconsider its position and resile from the breach by giving notice that it intends to comply with the contract.
- In the event the employee voluntarily resigns rather than being dismissed, the employee cannot claim wrongful dismissal.
- It is a question of fact on an objective assessment of all the evidence – and not just the employee's view of the matter – whether a constructive dismissal has occurred.
- The plaintiff bears the burden of proving that he or she has been constructively dismissed rather than having resigned, and establishing his or her entitlement to damages.
- The employer bears the burden of proving a failure to mitigate damages.
- The plaintiff cannot recover damages that could have been mitigated by an offer for the employee to return to his or her employment, provided the offer was reasonable in all of the circumstances.
- In some situations, it is unreasonable for an employee to decline to continue employment through the reasonable notice period while he or she looks for other work.
Justice Weatherill found that in this case, Mr. Rampre had not met the requisite burden or satisfied either branch of the test. On the evidence, it was clear that Mr. Rampre had voluntarily resigned. Although it was determined that the Society had at one point indicated its intention to reduce Mr. Rampre's salary and reclassify his job – which might have constituted a constructive dismissal had the changes actually been implemented – it never followed through. Indeed, the Society resiled from that position completely and communicated that to Mr. Rampre very clearly. It even went as far as urging him to stay, and telling him his job would continue on the original terms, after he indicated he was resigning.
Justice Weatherill took issue with Mr. Rampre's decision to withdraw his services while the two sides were attempting to find a solution, before any changes were made and while he continued to be paid his full salary. He also found that Mr. Rampre had in any event failed to mitigate his losses, and his evidence was less than credible because of his continuous attempts to cast himself and his claims in a more favourable light.
Employment law is rooted in contract law and, in that area of the law, the expectation is that individuals and businesses will fulfill the promises they have made to one another. A constructive dismissal happens when the employer unilaterally alters a fundamental promise it made to its employee such as a promise around wages or job classification. The story does not end there however. In order to determine whether an employee has been constructively dismissed, several additional considerations must be taken into account, including whether:
- the employee chose to treat the contract as at an end due to the employer's breach;
- the employee communicated his or her choice to the employer;
- the employer reversed its decision and clearly communicated to the employee that it would comply with the terms of the contract; and
- the employee voluntarily resigned.
Note: This a reprint of an article by Raema Quam of Roper Greyell LLP – Employment and Labour Lawyers.