Managing Flexibility in the Workplace While Avoiding Constructive Dismissals

Author: Gwendoline Allison

Published: June 2008.

In Michaud v. RBC Dominion Securities Inc., K. Smith J. stated:

An employer is entitled to restructure its operation to accord with its view of good business practices and, as well, to change the work assignments of its employees to give effect to the reorganization.

In today’s economic and technological climate, the issue of restructuring is becoming increasingly important. The goal of such restructuring is to reduce costs while maintaining the most valuable employees.

While the court accepts that an employer is free to restructure, the law makes it clear that in so doing, an employer must be careful to avoid constructively dismissing its employees. Constructive dismissals are the enemy of restructuring: they result in the loss of typically valued employees and cost the bank the money it sought to save on severance packages.

The area of restructuring job duties and responsibilities while avoiding or minimising the risk of potential constructive dismissal presents a huge challenge to human resources professionals. Some of the difficulties facing an employer when carrying out any restructuring of duties are caused by the fact that, unlike an ordinary dismissal, the control over what happens lies for the most part in the hands of the employee. The employee is the one who makes the claim and determines whether to accept the changes made to his position or to resign and seek damages for wrongful dismissal. A factor which creates further uncertainty is that the employee also controls when to make the claim.

Litigation of constructive dismissal cases often involves an in-depth analysis of all the factors at play and so, tends to be more expensive than the ordinary case of dismissal.

Although the employee has greater control over constructive dismissal claims, an employer can take steps to limit the risk of an employee making a claim of constructive dismissal. This paper will identify some of the pitfalls and discuss how an employer can take steps to limit its liability.

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