Why Dingwall might have a case for severance

Head of Royal Canadian Mint who resigned amid scandal could claim he was constructively dismissed, Ottawa says it has verbal advice from lawyers to offer him compensation
|employmentlawtoday.com

A political firestorm is brewing in Ottawa over the federal government’s plan to give David Dingwall, the former head of the Royal Canadian Mint who quit amid scandal, a severance package.

According to published reports, the federal government has received verbal advice from lawyers in the Privy Council Office recommending it provide Dingwall a severance package to avoid a potential lengthy and costly legal battle.

“The fact is that we have sought legal advice and legal advice has told us that there is an obligation and that we must meet that obligation,” said Prime Minister Paul Martin.

Dingwall, who served in the Liberal cabinet under former Prime Minister Jean Chrétien, has been at the centre of the firestorm since details of his lavish expenses as head of the Royal Canadian Mint became public. Last year, his expenses were reported to be more than $740,000, including $130,000 in travel, $14,000 in meals and a $1.29 pack of gum.

Questions have also been raised about a lobbying deal he was involved in before he took the job with the Royal Canadian Mint.

How can somebody quit and get a severance package?

The fact Ottawa is leaning towards giving Dingwall a severance package seems unbelievable to many and has been met with open hostility by some MPs and the public. But a look at legal precedent shows the idea has some merit.

Employees who quit can claim constructive dismissal and win damages from their employers. The British Columbia Court of Appeal provided a handy definition of constructive dismissal in its 1988 decision in

Farquhar v. Butler Brothers Supplies Ltd.

.

“A constructive dismissal occurs when the employer commits either a present 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 at an end,” the court said.

Usually a constructive dismissal occurs when there is a fundamental breach of the employment contract — for example, cutting someone’s salary or drastically altering job duties.

In Dingwall’s case, it’s not clear what grounds the federal government’s lawyers think he had for quitting that could lead to a successful claim for constructive dismissal in court.

Opposition MPs want the government to present the legal reasons for giving Dingwall a severance package in the House of Commons, but Revenue Minister John McCallum said the government doesn’t have a written report — it only has verbal advice at this point, according to a report in the

Globe and Mail.

McCallum has said a combination of labour law, policy and precedent are behind the government’s decision to pay severance. He has also said the government wouldn’t pay him a penny more than it was obligated to, and that if any of Dingwall’s expenses are found to be inappropriate, the government would recover that money “dollar for dollar.”

But some Liberal MPs want no part of a severance payout. Joe Fontana, the Labour Minister, said the government should not be offering Dingwall anything and that if Dingwall thinks he’s entitled to severance, he should go ahead and sue.


Cases involving constructive dismissal

Canadian Employment Law Today

has covered the topic of constructive dismissal extensively over the years. To view articles on constructive dismissal, click on advanced search and select “constructive dismissal” from the category menu.

For more information see:

Farquhar v. Butler Brothers Supplies Ltd.

, 1988 CarswellBC 46, [1988] B.C.J. No. 191, 23 B.C.L.R. (2d) 89, [1988] 3 W.W.R. 347 (B.C. C.A.)

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