THE EMPLOYERS' EDGE
B.C. Court takes Objective Look at Employer’s Reorganization in Denying Constructive Dismissal Claim
In recent years the doctrine of constructive dismissal – a type of wrongful dismissal whereby the employee claims the employer has fundamentally altered the terms and conditions of employment without the employee’s consent – has been altered by a few key decisions. Most notably, the decision of the Supreme Court in Evans v. Teamsters Local Union No. 31 was a positive change for employers as it now requires employees, to mitigate any damages by continuing to work for that employer in all but the most extreme cases.
While on a smaller scale, the recent decision of the British Columbia Supreme Court in Meyers v. Chevron Canada Limited is also encouraging for employers as it indicates a willingness of the Court to look objectively at the employer’s reorganization and not focus solely on the subjective view of the affected employee.
After working for one of their contractors for three years, Warren Meyers first joined Chevron Canada Limited’s IT Department in 1994. Starting as a Local Area Network Administrator, he changed jobs several times within the IT Department, although not every move necessarily came with a pay increase. By July, 2010 Mr. Meyers was the Applications Development Team Lead – a working supervisor position with three employees and two contractors reporting to him, but that still required significant contributions from Mr. Meyers in the non-supervisory aspects.
At that time Chevron underwent a massive restructuring in response to the global financial crisis. Where before the IT Department’s various resources serviced different departments headquartered around the world, the new structure would have all IT services centralized in Canada and called for the elimination of two-thirds of all the jobs in the IT Department. All of the previous conditions were eliminated and new positions created; as part of the process all new positions were assigned pay grades within Chevron’s regular pay grade system, and IT employees were asked to select positions for which they would like to apply from within the appropriate pay grade.
Mr. Meyers selected (among others) the position of Business Analyst. However, when told he would not be supervising any employees and would not have the same budgetary responsibilities as he had previously enjoyed in the Team Lead position, Mr. Meyers argued that he was being demoted and therefore being constructively dismissed, notwithstanding that his salary, benefits and bonus programs would not change.
In denying his claim of constructive dismissal, Justice Gerow said that she did not think the fact that Mr. Meyers would not directly supervise employees rendered this, objectively, a demotion, saying at paragraph 45 of the decision:
…I am not satisfied that there should be a term implied into Mr. Meyers’ employment contract preventing Chevron from varying the subject matter of Mr. Meyers’ management responsibilities. In my view, the evidence does not support the view that the parties contemplated that Mr. Meyers’ role was so rigidly defined. As noted above, Mr. Meyers’ supervisory role had diminished over time. 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.
Justice Gerow went on to say that even if the changes did constitute a breach of such a term in the employment contract, the changes did not go to the root of the contract, as there was not a “dramatic qualitative change” in his duties. This result is a positive one for employers because it focuses on the objective analysis and not on the employee’s own perception, which is common in constructive dismissal cases.
It is important to note that every claim of constructive dismissal must be considered on its own specific facts: in this case the employer followed a very structured process and could demonstrate objectivity. Likewise, where an employer has proper employment agreements in place they will have much greater success in defending against not just constructive dismissal claims but all types of wrongful dismissal.
Consider contacting the CCP Team if you are contemplating or undergoing organizational change, in order to ensure you don’t end up exposed to constructive dismissal claims.
Please Note: This blog has been prepared as an informational service for our clients and other interested parties. It is not intended to constitute legal advice, a complete statement of the law or opinion on any subject. Although we endeavour to ensure the accuracy of the content, no one should act upon the information provided without a thorough examination of the law after the facts of a specific situation are fully considered.