Constructive Retirement

Business In Vancouver Legal Matters Issue 983

Column: “Employment Issues” - August 12, 2008

Written by: Robert Yeager

Constructive Retirement:

A recent decision of the BC Court of Appeal makes for some interesting reading.

The case involved a plaintiff employee who was 66 years of age, had 18 years of service and who was employed as a receptionist. She also earned additional money doing janitorial work for this employer. Although she was 66, she had no plans to retire, hoping to work to age 71. As there was no compulsory retirement age rules with this employer, the employer had assured her she could do so.

The employer perceived it needed shipping back-up for good business reasons. The office manager felt the plaintiff should be asked to train for shipping duties, and asked the plaintiff to expand her duties by learning the shipping function and becoming the backup shipper. This involved complexities and skills that the plaintiff did not possess and would have trouble learning. The employer knew this. The office manager made it clear that if the plaintiff refused the new duties, another person may be hired who may also have to take over some of her accounts payable and receivable duties in order to have enough work.

The plaintiff was placed in a training program and received training and tried the new duties and found she simply could not perform them. She went to the office manager but was led to believe she could not go back to her old duties without the shipping duties training. The plaintiff approached the president, indicated she was unhappy, and that since she could not perform the new duties she felt she had no choice but to retire, although she did not want to do so. The president made no attempt to challenge her thinking or dissuade her from retiring. He did not offer her a return to her duties without the shipping duties. In fact he encouraged her to retire, offering her what might be viewed as some incentives to do so. He offered to pay her to the end of the year, and to continue the janitorial work she provided to the office for another year. Thus, the plaintiff resigned under these conditions.

Suing for Constructive Dismissal

The plaintiff sued for constructive dismissal. The plaintiff felt she had been given no choice, that either she had to learn the additional duties as backup shipping clerk, or the employer would take steps to hire a new person who would take over part or all of her work.

The employer defended on the basis that the plaintiff voluntarily retired, and there was only training and no actual change to duties and no hiring of anyone who took over the plaintiff’s duties. Based on case law that states the legal test for determining whether a change is fundamental (and therefore amounting to a constructive dismissal) is an objective test and not based on the plaintiff’s feelings or belief, the employer asserted that no change was implemented and the plaintiff’s subjective feelings or belief that a change had occurred is not relevant.

The Court rejected this defence, pointing to the silence of the president when the plaintiff put forward her issues and mentioned retirement. The Court said this silence affirmed the assessment the plaintiff made that she had no choice, was correct. The Court concluded that the added duties constituted a fundamental change to the employment contract, and since the plaintiff had no choice as to whether to accept them or not, there was the necessary objective ingredients to support a constructive dismissal.

Rectifying The Unfairness

This case is interesting because the constructive dismissal overcame the fact of retirement, and overcame what was clearly the subjective conclusions of the plaintiff based on input she collected from the office manager and the president. Some of that input was the silence of the president gathered after the point in time the plaintiff has indicated she will retire. Based on the input she concluded she had no real choice in the matter, and thus opted to retire in her meeting with the president. Once she mentioned retirement, the entire discussion took a different tack. This is a fact pattern somewhat lacking in the objective certainty usually necessary for constructive dismissals.

This case is best viewed as a fairness case. The plaintiff, obviously needing to continue to work and being at the low end of the pecking order, suffered from changes that she did not ask for and clearly could not perform, through no fault of her own. The Court felt the result of the steps taken by the employer caused the plaintiff to lose a job she planned on continuing. The fact the employer did nothing to correct this unfairness when it had the chance, something it could easily have done by allowing the plaintiff to revert to duties she could do and had done, cemented the Court’s decision to act to replace an unfair result with a fair one. That is what the Court can do, when the facts present themselves.

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