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When terminating employees who hold a long tenure of employment, the consequences of wrongful or constructive dismissal can be significant. Therefore, employers must be careful when altering the employment contracts or, or terminating, long-term employees.

In a recent case before the Ontario Superior Court of Justice, the Court was tasked with weighing in on a dispute where an employee and employer were unable to agree on whether the employee had actually been terminated.

Employee’s hours drastically reduced after nearly three decades of full-time employment

In Miranda v. Respiratory Services Limited, the plaintiff employee commenced a wrongful dismissal claim against the defendant employer. The employee had been employed by the employer for 35 years between 1982 to 2018 as an office administrator. Her duties involved standard reception and administrative tasks at her employer’s offer, who provided respirology medical services. However, the employment relationship was not codified in a written employment contract.

Eventually, the employer’s shareholders entered into a Share Purchase Agreement, after which a new doctor, Dr. Sharma, was hired. Dr. Sharma subsequently hired his own staff who took over some of the employee’s duties. At the same time, the doctor who the employed worked for, Dr. Lilker, reduced his hours, reducing the employee’s working hours from five days per week to three days per week. Over the next five years, the employee’s hours started to vary and she experienced fluctuations in her income. Dr. Lilker paid portions of the employee’s salary which became a source of tension with Dr. Sharma.

Direct employer passed away and new employer sought to alter the employment arrangement

In February 2018, after a period of vacation, Dr. Lilker passed away. The employee was originally supposed to return to work after Dr. Lilker’s vacation concluded, however, she was suddenly informed of Dr. Lilker’s passing by his family. In March 2018, Dr. Sharma requested to meet with the employee.

According to the employee, she was told that since Dr. Lilker’s passing, there was no more work available to her, however Dr. Sharma offered to reduce her working hours to one or two days per week. Additionally, her wages would be reduced from $34.00 per hour to $23.00 an hour. Dr. Sharma allegedly urged the employee to apply for employment insurance benefits to help offset the difference in her income.

Dr. Sharma claimed that the employee did not offer to return to work after Dr. Lilker’s passing, and allegedly requested a record of employment so that she could apply for employment insurance benefits. Dr. Sharma instructed another employee to prepare the record of employment referencing a “shortage of work” as the reason.

The employee struggled to find new employment

Dr. Sharma, along with other employees, maintained that there was some work available for the employee on odd days but she simply refused to work. The employee wrote to Dr. Sharma that “[o]ffering work on random days does not amount to honouring my prior terms and conditions of employment.” Dr. Sharma replied stating that “We can only call you if there is a doctor or the patients. If there are no patients what are you going to do?”

After her termination, the employee began to seek new employment for the first time in over 35 years. At 58 years old, with only one employer on her resume and limited computer skills, this proved to be difficult. The employee documented her job search efforts to find new employment over two years which spanned over 163 pages. She was only able to secure three interviews, but at the time of the hearing, had not yet been successful in finding new employment.

The employee’s statement of claim alleged that she had been constructively dismissed

The employee took the position that she had been constructively dismissed. This belief was prompted by the employer “unilaterally placing her on a layoff and telling her that [it] no longer had any work for her.” The employer claimed that the employee had never been terminated.

The Court confirmed that constructive dismissal occurred when “an employer decides unilaterally to make substantial changes to the essential terms of an employee’s contract of employment and the employee does not agree to the changes and leaves their job.” The employee is not considered to have resigned because the employer is no longer meeting its obligations. In these circumstances, the employee will be compensated in lieu of notice.

There are two types of constructive dismissal. The first type occurs when a single act breaches or alters an essential employment contract term. Alternatively, it may occur when there have been a series of actions taken by the employer which demonstrate that the employer no longer seeks to be bound by the contract.

Court found that the employer had breached essential terms of the employment contract

In reviewing the facts, the Court preferred the employee’s evidence over that of the employer. Although the employer maintained that the employee had not been terminated even after attempting to call the employee back to work in late March 2018, the emails sent from the employer to the employee contradicted this assertion. For example, the employer told the employee the following:

a.      “We can only call you if there is a doctor or the patients.  If there are no patients what are you going to do?”

b.      “There is work again next week on Wednesday and for 7th time we will ask you to come to work.”

There was no indication by the employer that the employee would have an ongoing position with consistent hours after being laid off in early March 2020. Previously, when the employee had taken unpaid leave, there was an understanding of what day she would return to work and these times were not considered formal layoffs. Moreover, on her return, there were no changes to usual employment.

As such, the Court found that the breach by the employer constituted a substantial breach of the employment contract. In the Court’s view, “a reasonable person in the same situation as [the employee] would have felt that the essential terms of her employment contract were being substantially changed.” As such, the Court held that the employee was constructively dismissed.

The employee was owed compensation in lieu notice

Given the employee’s age, length of service with the employer, and the fact that she had only one job on her resume, the Court held that the appropriate notice period was 22 months. The Court therefore calculated that the damages owed to the employee amounted to $67,271.38.

Contact the Employment Lawyers at Bader Law in Managing Terminated Employees

The trusted employment lawyers at Bader Law help demystify employment and human rights laws for businesses and employers. Our team helps simplify the law in an effort to help clients understand their options and make informed decisions with respect to employee terminations. Our employment lawyers regularly advise clients on discrimination, accommodation of disability and illness, harassment, wrongful dismissalseverance packages, and more. To schedule a consultation with a member of our experienced employment law team, call us at 289-652-9092 or contact us online.