Companies that wish to avoid constructive dismissal claims need to be careful when initiating disciplinary actions for employees who fail to follow policy or protocol. These actions vary and can include verbal or written reprimands, suspension with or without pay, loss of seniority, privileges, etc.. Employers claim that disciplinary actions are implemented to help employees meet their potential and maximize their contribution to the team. What many employees don’t know is that if these actions aren’t clearly outlined in their employment contract, the employer could be found liable for constructive dismissal.
Constructive Dismissal - Attitude, Discipline and Resignation
Take for example the case involving a long-term employee of 18 years and his employer, a Canadian chain of discount department stores. During the span of his career he relocated and managed different stores across the country, sometimes managing several stores at once. Things turned sour when the company implemented a new sales and service program that included coaching and training methods for managers to use with their staff. Obviously, the employee didn’t agree with the new strategy and failed to implement it. He received verbal and written reprimands which did not yield the results the employer was hoping for. The employee then failed to follow company policy regarding store hours and was suspended immediately, with pay, for one week. He was then advised that he would be suspended an additional 5 days, without pay and placed on probation for 90 days. The employee resigned and sought damages for constructive dismissal.
Constructive Dismissal- What is the Real Issue Here?
The constructive dismissal case began with two affidavits filed by the plaintiff accusing the company of malicious actions. He believed that the senior officials were systematically forcing the hand of older managers to quit in order to avoid paying out expensive severance packages. Was this the reason he sought damages for constructive dismissal in the first place? Despite the energy and effort spent on these lengthy affidavits, they were found to be irrelevant and argumentative. The plaintiff couldn’t support his scandalous claims and no evidence was presented on behalf of his informants.
Accusations aside, the issues, in this case, have little to do with determining whether the disciplinary actions of the employer were warranted or not. While the court decided that the probationary period was appropriate under the circumstances, the legal question remained as to whether the suspension without pay was a violation of the employment contract.
Constructive Dismissal- Damages Awarded to the Plaintiff
Neither the employment contract nor the Progressive Discipline/Corrective Action program of the company included any mention of suspension without pay. The courts ruled in favour of the defendant and decided that fair notice for an employee of 18 years in a managerial role was 15 months. Even though the plaintiff had already received the appropriate compensation for his resignation, this ruling awarded him over $30,000 more.