Have you ever wondered if judges are more sympathetic to employers who are forced to make changes to their business during difficult economic times? The British Columbia Supreme Court has recently1 weighed in on whether job changes as part of corporate restructuring can amount to constructive dismissal.
Warren Meyers started working for Chevron Canada Limited in 1994 and most recently held the position of Applications Development Team Lead. In 2010, Chevron restructured, eliminating Mr. Meyers’ position. He was offered the position of Business Analyst, but he considered this to be a demotion, as he no longer had employees reporting to him. As a result, Mr. Meyers resigned, and sued Chevron for constructive dismissal.
Mr. Meyers’ claim was dismissed by the British Columbia Supreme Court. The Court commented that there was no written contract, and that over the course of his employment, Mr. Meyers had “had several job changes, some of which were considered promotions and some which were considered lateral moves”, all of which he appeared to have agreed to. The Court concluded that the parties had clearly not contemplated that Mr. Meyers’ role was to be so rigidly defined.
The Court further commented that the change did not go to the root of Mr. Meyers’ employment agreement with Chevron. The Court looked closely at the work Mr. Meyers would have performed had he accepted the Business Analyst position, and found that he would maintain his leadership status as project manager and still have some budgetary responsibility. Therefore, the Court concluded that the Business Analyst position “was not a dramatic qualitative change in his duties.”
The Court did acknowledge that in the new position Mr. Meyers would have lost some stature and would have moved from an office to a cubicle. The Court held that, while these changes may have been subjectively humiliating and degrading to Mr. Meyers, they were not so when viewed objectively. Interestingly, the Court took this as an opportunity to state that: “an employer requires some latitude to structure the affairs of its operation, and such an inflexible term would shift the balance too far in favour of the employee.”
What does this mean for employers?
- Constructive dismissal pendulum swinging in direction of employer.
What is particularly interesting about Chevron is the fact that a total removal of an employee’s managerial responsibilities was found not to be a constructive dismissal. You can easily imagine another similar case with an opposite finding. It is not unusual for us to see constructive dismissal decisions swinging in favour of employers in challenging economic times. While employers may be inclined to breathe a little easier in light of Chevron, caution is still recommended, as the pendulum in these constructive dismissal cases eventually tends to swing back in the other direction.
- Check the employment contract before changes are made.
The Court in Chevron paid specific attention to the absence of a written employment agreement. As such, the decision serves as a reminder to employers that they can use their employment contracts as a means of allowing themselves even more flexibility to make the types of changes that might be necessary in the future.
- Removal of supervisory role may not amount to constructive dismissal.
The removal of an employee from a managerial position does not automatically trigger a constructive dismissal claim. Employees ought to examine whether the new role provides comparable leadership responsibilities. This may require the employee to try out the new role before coming to the conclusion that it is a demotion, rather than hastily resigning as soon as their old position is eliminated.
- Constructive dismissal measured on objective standard.
Even if the new role in not comparable to an employee’s old position, the changes will be assessed objectively. What may seem degrading to a certain employee may be differently perceived when considered on a “reasonable person” standard. Courts will always favour an objective analysis rather than the employee’s subjective experience.