SCC Guidelines on Constructive Dismissal and Suspensions

 

The Supreme Court of Canada (SCC) has released guidelines regarding constructive dismissal and employee suspensions to employers enabling them to formulate a policy. The guidelines suggest that they provide a proper business justification procedure for suspensions with pay that may imply that the suspended employer has been constructively dismissed.

 

Constructive dismissal is defined as the process where an employee has not been terminated and the employee claims that the employer repudiated the employee contract. These actions further results in a claim from the employee for payment in-lieu of proper termination notice from their employer. In some cases, depending on the specific circumstances and actionstaken by the employer a claim for aggravated damages may be submitted.

Employee suspensions are a factor that may create tremendous uncertainty regarding the authority of the employer to suspend an employee. This is more applicable in areas where employees are non-unionized. The other uncertainty that exist is whether or not the suspension amounts to constructive dismissal of the employee.

With this in mind the latest decisions and comments of the Supreme Court of Canada may not be able to address all the questions or give advice on constructive dismissal and suspension procedures. They do however provides a framework and clarify some aspects of this topic. This is important as the stakes may result in file changing implications for the employee.

To understand the implications that could result in actions taken, the case of Potter v. New Brunswick Legal Aid Services Commission, 2015 SCC 10 (“Potter”), may provide more insight into the problem. In this specific case an employee was suspended, both courts agreed with the findings, the SCC however overturned the decision and ruled that the suspension was not reasonable and constituted constructive dismissal.

The SCC defines constructive dismissal in the light of the above case in two distinctive forms. The first is that it is a unilateral act of the employer breaching the terms of the employee contract. This is the result of changes to the compensation, duties or place where the employee works. If this happens the employee must be able to prove on a balance of probabilities that changes were made and that these changes altered the core of the employment contract. Secondly, a series of acts taken by the employer that indicates no intention of being bound by the existing employment contract. This could be the result of the employer making continued employment intolerable to the employee. The test for any court is whether any reasonable person will agree that the employer has no intention of being bound by the employment contract.

 

Employee suspension in a field without union presence requires the employer to prove on a balance of probabilities that they have either express or implied contractual authority to impose employee suspensions. If the employer has this authority then the suspension is not deemed to be a breach of contract. The condition is that the employer must be able to demonstrate that the suspension imposed is both reasonable and justified.

 

Each case that is laid before the SCC is judged on the nature and specific circumstances of the suspension. The factors that the Supreme Court of Canada will investigate are:

1. What is the duration of the suspension?
2. Was the suspension with pay?
3. Did the employer demonstrate good faith?
4. Did the employer demonstrate a legitimate business reason for the suspension?

Good faith is defined as providing the employee with reasons for suspension.

A Legitimate business reason is defined in the context of disciplinary actions.

Helping you understand what’s in your pocket…

Until next time