Does quitting a new position still amount to constructive dismissal?

Ontario (Employment Standards Officer) v. Tenneco Canada Inc. (2002), 166 O.A.C. 116 (Ont. S.C.J.)

This was an application by an employment standards officer for judicial review of a decision setting aside an order that the company pay its former employee damages for its constructive dismissal of the employee. Jerry Schwartz had worked for Tenneco as a chemical lab technician for 16 years earning $20 per hour. Due to downsizing, his old job was no longer available and the company offered him a production job at $14 per hour.

The production job was a more physical position which required lifting, bending and heavy labour. In his former position, Schwartz was also able to earn an extra $310 every third week for being on call, something which was not available to him in the new job.

Company policy provided that Schwartz would receive his original salary for a period of five months while he was in the lower position.

He agreed to take the lower position, but within a few days he began having difficulties with his back due to the heavier work. After working in the new position for six days, he quit because he did not want to work in the lower position and had an opportunity to take another position outside of the company. The company drafted a letter of resignation which Schwartz signed.

The employment standards officer who conducted the investigation decided Schwartz had been constructively dismissed and was entitled to benefits. On appeal it was held that since Schwartz had quit his new position he was not constructively dismissed and therefore the court overturned the employment standards officer’s decision.

Upon judicial review by the Ontario Superior Court of Justice, the court held the Ontario Labour Relations Board had erred in treating the constructive dismissal of an employee and the resignation of that employee as being mutually exclusive. The correct approach was to first determine whether or not the employee had been constructively dismissed. The court held it was clear in this case there had been a constructive dismissal given the differences in pay and type of work.

The next question to answer was whether Schwartz could be viewed as having accepted the dismissal on the basis of his working in the new position for six days before resigning. The court held Schwartz had not accepted the change or waived any of his rights arising from his constructive dismissal. Accordingly an order was made against the company for payment of Schwartz’s benefits.

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