The Law can determine that you're fired!
A constructive dismissal is a termination by another name. It’s what happens when the law deems that you have been terminated even though nobody ever said, “You’re fired.”
Whether you are outright terminated or constructively dismissed, the law expects you to attempt to mitigate your damages by seeking and accepting reasonable alternative employment.
While both concepts sound reasonable, sometimes, as the saying goes, the law is an ass. By the time Philip was promoted to the position of assistant superintendent mechanical for a railway company he had been working there for almost 30 years. He was responsible for the day-to-day activities of six different facilities. He oversaw the mechanical portion of the locomotive and freight car repair functions for the entire company. He was responsible for safety and productivity and had approximately 100 employees reporting to him. Two years later, as a result of a corporate-wide reorganization, Philip was told he was being demoted to the position of mechanical supervisor in the wheel shop. The position was two grade levels below him and now he would have only 12 employees reporting to him. He was told that even though he was being moved to a lower pay grade, he would not see any reduction for one year in his remuneration.
Philip did not accept the new job and sued for constructive dismissal. He won on that point.
The judge said that the employer could not demote Phillip to a position of lesser responsibility with a pay freeze for one year and a reduction thereafter. The judge found that this was a significant demotion and that Philip had been constructively dismissed. He had a right to walk out and take the position that he was terminated.
Given Philip’s age, seniority, and level of responsibility, the judge decided that Philip was entitled to 24 months’ reasonable notice. While things sound good for Philip so far, this is where things went awry.
The employer argued that Philip had an obligation to mitigate his damages by accepting the new position even if he had been “constructively dismissed”. It pointed out that this was just a company-wide restructuring and had nothing to do with Philip personally. There was no rancor or bad feelings toward Phillip. Even though Philip indicated that he felt humiliated, upset and embarrassed by this drastic demotion, the judge found that he failed to mitigate his damages and nothing prevented him from continuing to work at the new job until he found a new position elsewhere.
As it turns out, Philip found a job after five months of unemployment. The judge reduced the 24-month notice period, in effect, to 19 months.
So what the judge said in this case is that the employer had no right to unilaterally demote Philip without notice and by doing so had effectively terminated him but it didn’t really matter because Philip had to put up with it and do the work until he found something better. Thankfully, there are not a lot of cases like this and hopefully most judges are shrewd enough not to follow them. What is the point of telling somebody they were constructively dismissed and the employer abused their rights if they can do nothing about it but suck it up and take the job?
The law giveth with one hand and taketh away with the other; “It is a fundamental breach of the terms of your employment for the employer to demote you after thirty years but even so we are going to reduce your damages because you refused to lie down and take it.”
If this kind of circular thinking were follow by many judges it would effectively announce open season on employees. The advice employment lawyers should give employers, if this is were the law, is that they can do whatever they want to an employee with respect to demoting them or changing their jobs as long as they do it nicely and without rancor. The employee is going to be expected by the courts to shut up and stay put.
Most of the time, the law really does make sense. Once in a while, unfortunately, it can be downright bizarre.
Ed Canning practices labour and employment law with Ross & McBride LLP, in Hamilton, representing both employers and employees. You can email him at firstname.lastname@example.org