While most employers are aware that changing an employees’ position without their express consent would be a constructive dismissal, some employers still try to justify this in opening up a position for a different candidate. The fact that the employee may have been prepared to accept some of the changes does not absolve an employer from liability for constructive dismissal. Courts are astute at determining an employers’ underlying reasons for changing an employees’ position. Under certain circumstances an employee may be justified in leaving and will not be expected to continue employment for the purpose of mitigating their damages.
In Jodoin v Nissan Canada, the Ontario Supreme Court decided that Nissan’s change to Harry Jodoin’s position was a constructive dismissal of his employment and that under the circumstances, he was not expected to continue his employment with Nissan for the purpose of mitigating his damages.
On December 22, 2010, Jodoin was told he was being moved into the new role of Senior Manager of Vehicle Participation Programme. No such position existed in the Canadian company. His prior role of Senior Manager of Retail Sales and Sponsorships had a $30 million dollar budget, staff and an office. While the role of Senior Manager of Vehicle Participation Programme did exist in the Nissan America company, in Canada there was no job description which outlined what was to be expected in the position. There were no employees to report to Jodoin, no private office, no budget and no long-term goals in place for the position. Jodoin had no privacy as he was given a cubicle in a very open area of the building where employee-traffic moved throughout the day. Only the salary stayed the same.
Court Decision – Constructive Dismissal
The Court referred to Blight v. Nokia Products Ltd., 2012 CarswellOnt 4004 (S.C.J.) where Mr. Justice B.G. MacDougall referenced the leading Supreme Court of Canada case of Farber v. Royal Trust Co.  which stated:
“To reach the conclusion that an employee has been constructively dismissed, the courts must determine whether the unilateral changes imposed by the employer substantially altered the essential terms of the employee’s contract of employment. For this purpose, the judge must ask whether, at the time the offer was made, a reasonable person in the same situation as the employee would have felt that the essential terms of the employment contract were being substantially changed.”
The Court found that the only essential element of the contract that was not changed by Nissan was Jodoin’s salary. While Jodoin was given the title “Senior Manager of VPP”, there was nothing to manage. The title was essentially a “hollow term” being “a title without a job description, no long-term goals, no budget and no one to manage.”
In his previous position, Jodoin had a large budget of about $30 million. The Court saw this as another example of the objective test to be used when the former role is compared to the new position with no budget. In his new role, the company wanted Jodoin to meet a short-term goal of 500-750 car sales but there was no plan as to how he could meet that goal.
The Court saw that the loss to Jodoin of the private office and move to a cubicle out of the way from the main managerial offices was another example of how the company never planned for the position.
As there was no job description for the new position of Senior Manager VPP and none developed after Jodoin was moved into the position, the Court concluded that they could draw a “reasonable inference that the position was created by Nissan in Canada in order to get Jodoin out of his position so he could be replaced by McNeal.”
In concluding that Jodoin was demoted the Court considered what took place when Jodoin left the new position. The Court found that Jodoin’s “replacement, had no sales experience, yet the position was one of sales….At the end, the position was effectively shrunk to being nothing more than an answering machine in a Call Centre, where someone may eventually return the call.”
The Court quoted the Court of Appeal decision of Gilbert v. Whittnauer Worldwide L.P., (2002) where the Appeal Court concluded that Mr. Gilbert was constructively dismissed:
“This is based on, among others, factors such as substantial reduction in managerial responsibilities, the removal of the appellant from his office and the perceived and actual loss of leadership in the company.”
In concluding that Jodoin was constructively dismissed the Court relied on the above Court of Appeal decision and concluded that Jodoin “formerly had a leadership position, a responsible, successful Senior Manager position, and was demoted to one with no management at all.”
Court Decision – Mitigation
In examining mitigation the Court referred to the Ontario Court of Appeal decision of Mifsud v. MacMillan Bathurst Inc., 1989 CarswellOnt 770:
“The fact that the transfer to a new position may constitute in law a constructive dismissal does not eliminate the obligations of the employee to look at the new position offered and evaluate it as a means of mitigating damages. The Court looks at whether the salary offered is the same, what the working conditions offered are like, and what the personal relationships are in any new position offered to the plaintiff. The plaintiff cannot simply offhand dismiss an offer of employment without properly analizing any offer given to him.”
The Court also considered the Supreme Court of Canada in Evans v. Teamsters Local Union No. 31, , “the relationship between employer and employee must be looked at on a case by case basis, when the reasonableness of the employee’s mitigation efforts is being evaluated.” In analyzing the case in a “multi-factored and contextual” way to quote Evans, supra, the Court held that Jodoin was not obliged to stay on with Nissan any longer than he did as a replacement had already been interviewed for the job of replacing Jodoin before he was even told of the transfer to the new position.
Lessons for Employers
Employers should remember that Courts will examine carefully the reason for any change of position, including whether there was already an available candidate for the prior position and what became of the new position after the employee alleging constructive dismissal left employment. Guidance should be sought from experienced Employment Law Counsel when transitioning employees to assure that there are no grounds for employees to allege constructive dismissal.
Lessons for Employees
Employees should be aware that even if the same salary is continued, a change in the terms of employment may still be considered constructive dismissal and that there are circumstances where despite being constructively dismissed, they are still obligated to continue working with that employer. Advice from experienced Employment Law Counsel should always be sought when a change of position is made or proposed and with the decision of whether to leave and claim constructive dismissal, or to claim constructive dismissal and continue working for that employer.
Minken Employment Lawyers is your source for expert advice and advocacy on today’s employment law issues. Whether you are an employer or an employee, we can help. Contact us to see how.
Sign up for our e-Newsletter for the latest updates and case studies in employment law.