Disciplining employee who isn’t keeping files up to date

Employee says we fundamentally changed his job responsibilities because he had never been disciplined before or forced to keep his files up to date. Is he correct?

Brian Johnston
Question: We have an employee who has not been keeping his files updated. We have given repeated verbal warnings about this problem and have introduced a company policy that says files must be updated. Consistent with the terms of this new policy, we have removed clients from his territory for files that have not been updated. The employee is now saying that we have fundamentally changed his job responsibilities because he had never been disciplined before or forced to keep his files up to date. Is he correct?

Answer: No, the employee is probably not correct. Where there is a unilateral fundamental change in a term or condition of employment, without reasonable notice of that change, an employee may claim constructive dismissal.

In Farber v. Royal Trust, the Supreme Court of Canada said constructive dismissal is determined on the facts of the employment relationship:

“Each constructive dismissal case must be decided on its own facts, since the specific features of each employment contract and each situation must be taken into account to determine whether the essential terms of the contract have been substantially changed,” the court said.

Cases since Farber have provided insight into what changes to employment will attract a finding of constructive dismissal.

In 2005, the Ontario Superior Court of Justice considered constructive dismissal in the context of discipline imposed by an employer in reaction to an employee’s poor performance. In Carscallen v. FRI Corp., the worker, a 43 year old marketing executive, was given responsibility to deliver a marketing booth and marketing materials from Toronto to Barcelona. The booth and materials failed to arrive in a timely fashion. E-mails were exchanged between the worker and the president of the company and a few days later she was suspended without pay.

A week later, she was demoted to manager of marketing and told she would no longer be allowed to work flexible hours, would lose her office and would be assigned to a shared cubicle. She sued alleging constructive dismissal. The court agreed, saying there was never an agreement that allowed the employer to discipline by suspension.

The court noted that a company policy laid out an investigation and multi-stepped progressive discipline scheme for disciplinary matters but was not followed in the circumstances. The court said:

“Notably, the FRI Corporate Employment Policies and Procedures Manuals makes no mention of an employer right to suspend. Rather it speaks to implementing ‘fair and constructive disciplinary guidelines, which we feel will allow for rehabilitation in the workplace rather than punishment.’ Indeed, this policy suggests a proper investigation and multi-stepped progressive discipline scheme. This court heard no reference to considering or following those guidelines in the handling of its complaint about the Barcelona booth and ensuing e-mail exchange in the spring of 2003. This employer did not follow the very policies it promulgated to its employees and professed to be guided by.”

The court found that because there was no express term in the employment contract providing for this type of discipline for poor performance, there had been a constructive dismissal.

In the question posed above, the employee has been repeatedly warned and the removal of clients is consistent with the policy. However the employee may say that the policy itself was a fundamental change, introduced unilaterally without sufficient notice and therefore the application of the policy constitutes constructive dismissal. As the Supreme Court of Canada has said, constructive dismissal depends on the situation.

Brian Johnston is a partner with Stewart McKelvey Stirling Scales in Halifax. He can be reached at (902) 420-3374 or [email protected].

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