Recent Court Of Appeal Decision Highlights The Risks Of Re-Hiring Formerly Terminated Employees

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Employers are increasingly aware of their obligations to investigate workplace sexual harassment and provide a workplace free of workplace sexual harassment. The recent decision of the Ontario Court of Appeal in Colistro v Tbaytel confirms that employers must be cautious even in hiring decisions. In this case, the Court of Appeal upheld the lower court's decision finding that it was constructive dismissal to re-hire a former employee who had a history of victimizing a current employee by sexual harassment. Constructive Dismissal is where the courts determine that the employment relationship was terminated despite no deliberate step – such as a termination meeting – to end the employment relationship.

The background to this case is that a company re-hired an executive that had been terminated more than a decade earlier. At the time that the executive was re-hired a current long service employee advised her supervisors that she was not feeling well and in fact would require a stress leave. The current employee was ultimately diagnosed with PTSD and depression. At trial the court awarded wrongful dismissal damages of 12 months for constructive dismissal; but denied the claim for intentional infliction of mental suffering. Both the employee and the employer appealed. In this blog we will focus on the claim for constructive dismissal.

The Employer argued that a single act, in this case re-hiring the executive, was not enough for constructive dismissal. The Court of Appeal rejected this argument and concluded that there are two ways constructive dismissal can occur. These are:

  1. An express or implied term of the employment contract is breached and it is determined to be sufficiently serious; or
  2. The employer's conduct more generally shows an intention not to be bound by the contract making continued employment intolerable.

In this case the Court of Appeal upheld the trial judge's determination that the decision to re-hire the executive was demeaning, dismissive and re-victimized the employee such that a reasonable person would see continued employment as intolerable. The Court of Appeal expressly noted that a single act by an employer can in certain circumstances be sufficient to amount to constructive dismissal. In this case the single act was sufficient, despite offering the current employee a different workspace and despite the datedness of the events of the re-hired employee.

The Court of Appeal's decision to uphold the constructive dismissal claim should cause employers to take note. When re-hiring an employee, particularly one who has a history of harassment or sexual harassment in the workplace, there is risk that the employer could face claims from current employees. Employers should carefully assess all impacts of a potential hiring decision before proceeding. Employers should also consider potential impacts on existing employees before offering reinstatement to former employees as part of a settlement or mediation process.

Note: This a reprint of an article by Angela Wiggins of CCPartners.