Katherine’s Employer Said the Letter Telling Her She Was Being Demoted Was an Error. Katherine Sued for Constructive Dismissal
In 2019, Katherine began working for an advertising agency as director of analysis and insights. Two years later, she was promoted to associate partner and vice-president of media and analytics. Six months later, she was promoted to executive vice-president of media and analytics. Her new position paid $300,000 a year instead of the $220,000 she used to make.
In July of 2022, she took a maternity leave. Within a week, the owner and boss contacted her to let her know the company was having extreme cash flow problems. They were working out a plan to keep the company afloat. Over the course of her maternity leave, they asked her twice to extend her leave to relieve them of the cost of employing her. They openly discussed the possibility of a severance package.
Katherine complied with their requests and extended her leave.
After about 16 months on leave, Katherine was advised that the president and owner were on reduced compensation, and they were expecting Katherine to accept a $90,000 salary reduction when she was scheduled to return two months later. She was also told she would be moved to a new position. The employer mentioned that she would be the “easiest to move” because her maternity leave replacement was coping.
A few weeks before Katherine was scheduled to return, she was given a contract indicating that she was demoted to her old position and her salary reduced by $90,000.
Katherine did not sign the contract and told the employer she would not be returning.
When Katherine sued for constructive dismissal, the employer claimed that the apparent demotion of Katherine to her old position was an error because they reused an old letter. The judge accepted it might have been an accident, but thought the employer had a moral and legal duty to its loyal and allegedly valued employee to craft the agreement carefully and pay attention. The fact that the letter did not invite any room for negotiation with respect to the salary was thought by the judge to be hostile.
Katherine felt she was being coerced into taking a pay cut while in the midst of having a new baby and purchasing a house.
The judge accepted that the company was going through some real duress and that other executives had made sacrifices, but the manner of presenting the new contract to Katherine was simply not acceptable and created a toxic work environment.
By the time Katherine was terminated, she had four years of service and was in a senior executive position. The judge decided she was entitled to 12 months’ notice of her termination at the rate she was receiving before her maternity leave.
Katherine made a claim of discrimination based on her gender/maternity leave, but did not succeed. The judge did think that given her isolation from the company during the leave, it behooved the employer to exhibit heightened sensitivity and professionalism in negotiating her return. The fact is that even if Katherine had never taken a leave, the employer would have tried to impose these changes.
The judge awarded punitive damages of $40,000. The tone of the letter was non-negotiable and included a demotion. Even if that was by accident, the employer was responsible, in the judge’s view, for the anxiety it created in Katherine. In this case, the employer’s carelessness in dealing with Katherine cost it a significant amount of cash. There’s a lesson here for all employers.
This article was originally published by The Hamilton Spectator.
