A public-sector worker in British Columbia who left her job in the midst of a downsizing has lost her claim for wrongful dismissal against the province.
Patricia Derkach was the manager of corporate services in the Penticton office of the Ministry of Forests. She had worked there since 1994 and had been employed by the province in various positions since 1981.
In July 2002 she accepted a job, at a reduced salary, as the human resources co-ordinator for the City of Penticton. At the time the Ministry of Forests was undertaking a substantial reduction of its staff.
The Penticton office was one of seven district offices in the Kamloops region of the ministry. In early 2002 about 40 staff were employed in the Penticton office.
Four of the employees, including Derkach, were managers excluded from the union. Derkach’s duties included HR management, business planning, contact administration and budgeting and financial planning. Her annual salary was about $61,000 and she received additional employee benefits.
In January 2002 ministry employees were told that, over the next three years, about 1,400 positions would be eliminated. This amounted to about 35 per cent of the ministry’s workforce. It was anticipated there would be about 450 layoffs in the first year.
Derkach first heard of the cutbacks in November 2001 when she was part of a conference call with an assistant deputy minister. At that time she learned of a plan that would remove the position of corporate service managers (the position she held) from district offices and move the functions to a new central agency.
On Jan. 15, 2002, she attended a meeting at the regional office in Kamloops where she learned the Penticton office would close on March 31, 2003.
On Jan. 17, the announcement about the cutbacks was made to all ministry employees.
With this information, Derkach was convinced she was going to lose her job. She concluded she had effectively been given working notice in January 2002 and that she had an obligation to seek alternative employment both inside and outside the provincial government.
She was under the impression that if she did not undertake a job search, it could impact whatever severance pay she would be entitled to when her job was eliminated.
In carrying out her job search she responded to a newspaper advertisement for an HR co-ordinator with the City of Penticton. The position was offered to her in May 2002. She was not anxious to leave her ministry job and discussed her concern with the district manager. He suggested she seek an answer from the regional manager and the executive of the ministry on the possibility that her position could still exist in the restructured organization.
E-mail sent to the ministry
On May 28, 2002, she sent an e-mail to a number of people in the ministry, including the deputy and assistant deputy ministers and the regional manager. In the e-mail she advised of the job offer, noting that she was faced with a decision to accept or reject the offer.
She said she would be facing a $13,000 decrease in annual salary and a decrease in benefits and outlined what she believed was happening at the ministry. The regional manager responded on May 28, confirming that what Derkach thought was going to happen was essentially correct.
On May 30 the assistant deputy minister responded to the e-mail. She said Derkach had essentially captured fairly the critical points of the restructuring and went on to state:
“At this point if there is an opportunity to go to another position I would encourage you to do so. This is not meant to push you out the door but recognizes that if there is a solution for you at this point then I would encourage you to pursue it.”
The district manager told Derkach that it was ultimately her decision whether or not to accept the job with the city. He did not tell her she had an obligation or a duty to take the position.
Derkach left her employment with the ministry and joined the city on July 2, 2002. When she left the ministry she was presented with a record of employment that stated her reason for departure as “resigned to take another job.” She returned the document stating that her lawyer had advised her not to accept it unless it was altered to use the form’s code for “office closing, position being terminated.”
She also stated that she did not resign but had been terminated through constructive dismissal.
At trial, the assistant deputy minister said when Derkach accepted the job with the city, her employment with the province had not been terminated. She said Derkach had no obligation to look for work and was under no obligation to accept the new job. She said until a letter of termination was issued, Derkach remained part of the ministry’s workforce.
But the province did concede that in May 2002 it was unable to state one way or another whether another job would be found in the public sector for Derkach before the Penticton office was slated to close on March 31, 2003.
Derkach filed an action for wrongful dismissal or, alternatively, constructive dismissal.
The court’s decision
Justice Bryan Ralph of the British Columbia Supreme Court said the announcement by the ministry in January 2002 that it was slashing its workforce undoubtedly caused considerable anxiety and stress for employees.
In Derkach’s case, she was in an office that was going to be closed and in a position that was to be eliminated from the ministry.
“The dilemma created for Ms. Derkach when she received the offer of employment from the City of Penticton was, therefore, a difficult one,” said Justice Ralph.
But the announcement of job cuts cannot be said to have constituted notice to Derkach, he said.
“It is clear that the ministry did not intend to terminate or give notice of termination of (her) employment in January 2002 and hoped to find alternate employment for her within the ministry,” said Justice Ralph.
He said the scope of the announcement was further evidence that it was not intended to be notice of termination to Derkach.
“The announcement affected a wide number of employees in different parts of the province, including employees in offices that were not scheduled to close, and employees with different job functions and years of experience,” said Justice Ralph.
The employer would not have succeeded in arguing that the announcement constituted notice to Derkach and, therefore, she was similarly unable to succeed on such a ground, he said.
Justice Ralph boiled the argument down to this: “(Derkach) faced the unpleasant choice between an uncertain future in the ministry or continued employment in Penticton in a known position in which she had considerable experience but would earn less income.”
He said he was satisfied that province’s downsizing announcement, its subsequent policy statements and its e-mail responses in May 2002 did not constitute a dismissal of Derkach.
If not wrongful dismissal, maybe constructive dismissal?
The court then considered whether the ministry’s representations to her constituted constructive dismissal.
A constructive dismissal occurs when the employer commits either a present breach or an anticipatory breach of a fundamental term of a contract of employment, thereby giving the employee a right, but not an obligation, to treat the employment contract as being at an end.
Justice Ralph said, if there was a breach of a fundamental term of her contract, it would need to be found in the January 2002 announcement by the ministry and the accompanying information.
He said the May 2002 e-mails did not purport to change Derkach’s position — they were directed to what might happen after March 31, 2003, when the Penticton office was slated to close.
In the end, it didn’t matter whether she had been constructively dismissed. The provincial government has a severance administration policy for calculating notice periods for its employees. Given her age and years of service, Derkach would have been entitled to about 11 months’ notice. If she had been constructively dismissed in January 2002, her employment was secure until the Penticton office closed on March 31, 2003 — a period of about 14 months.
The court concluded she had not been constructively dismissed and dismissed her action.
© Copyright Canadian HR Reporter, Thomson Reuters Canada Limited. All rights reserved.