It is well established that the demotion of an employee may amount to constructive dismissal. However, it is not generally well known or understood that a promotion can also be grounds for an employee to assert that he or she has been constructively dismissed. Employers should therefore always exercise caution before insisting that an employee accept a new position.
Generally, an employer cannot make fundamental and unilateral changes to a contract of employment unless such changes are permitted by the contract of employment, or consented to by the employee. To do otherwise would be a breach of the express or implied terms of the employment contract. The court will use an objective standard to determine whether such changes have occurred. Common factors that suggest constructive dismissal include:
- demotions to a lower position;
- changes to remuneration, including reducing salary or rate of commission, eliminating the right to be paid for overtime work, and changing the employee’s benefits;
- changes to responsibilities and status, including refusing to allow an employee to perform duties for which they were hired, substituting duties of a lower status for the employee’s former duties, and restricting the scope of duties; and
- transfer to a new office or location.
Constructive dismissal claims have customarily arisen in circumstances of downward or unfavourable changes to an employee’s job – either monetarily or in status. As stated, the courts have recently shown a willingness to find that a unilateral promotion is also sufficient to constitute constructive dismissal.
The British Columbia Supreme Court in Parks v. Vancouver International Airport Authority, 2005 B.C.S.C. 1883, held that a unilateral change in employment can constitute constructive dismissal even where the effect of the change is a promotion of the employee. The plaintiff was employed in a middle-management position by the Vancouver International Airport Authority. He was employed as a Shift Superintendent in Airport Operations for approximately two years, but in late 2002 was transferred to become Superintendent of Airport South. The plaintiff was informed in late 2003 that as part of a reorganization of a number of management employees he was being promoted to Shift Manager of Airport Operations, and that this change was not optional. The plaintiff declined the promotion and his employment was terminated.
The Court concluded that the new position offered to the plaintiff was in fact a slight promotion or, at minimum, a lateral transfer. Essentially, the new position would have required the plaintiff to supervise an additional 30 employees and work different hours than his current position (such that it would interfere with his family and community life); this was accompanied by a change in remuneration. The plaintiff would have been required to trade his current base salary for a similar base salary with a more lucrative, but uncertain, bonus. With the new bonus structure, the plaintiff could potentially earn less or more than his current salary. Therefore, despite an increase in status and responsibility, it was uncertain whether or not the plaintiff would receive a raise in his annual salary. The Court decided that, objectively, the proposed new position would have resulted in unilateral and fundamental changes to the plaintiff ’s contract of employment, and, as such, he was constructively dismissed.
In coming to this conclusion, the Court relied on the decision of Hanni v. Western Road Rail Systems (1991) Inc., , B.C.J. No. 563, in which the Court held that even though the employee was transferred to a new position which in effect was a slight promotion, it was a unilateral change sufficient to constitute constructive dismissal. The plaintiff was the second most senior employee at Western. When the company reorganized, it unilaterally re-assigned her duties, relocated her office, and hired a new employee to assume some of her prior duties. The Court determined that the plaintiff was constructively dismissed because the company made these changes without consulting her.
The message from the British Columbia courts is clear. Constructive dismissal claims are not restricted to circumstances where an employee has been demoted. Employers should always exercise caution when reorganizing or restructuring their business. If the employee will not willingly accept a promotion, the employer should think carefully before insisting that the employee assume the new position. This is especially true when dealing with senior management personnel who may not be interested in taking on more responsibility and expanding their duties. These individuals must be handled carefully because they are typically entitled to the highest severance awards. In order to avoid unnecessary and costly legal proceedings, the employer should educate itself as to the types of unilateral changes that are specifically permitted in the contract of employment, as well as the current case law.