Does Forced Geographic Relocation Constitute Constructive Dismissal?

Constructive dismissal in Canada is a fundamental breach of an employment contract that allows an employee to act as if he or she has been dismissed and obtain compensation.  Successful claims can result in significant awards for wrongful dismissal damages.  However, employees must be cautious when making constructive dismissal claims.  If they act too early or with improper advice, they can find themselves on the losing end of an expensive lawsuit, with no interim income.

At the very easy end of the constructive dismissal spectrum are cases where employers unilaterally reduce an employee’s pay, with little or no notice.  Similarly, a significant demotion for an employee, even where the overall compensation is kept intact will usually be grounds for a constructive dismissal claim.  But there are many other cases that are in a much greyer area.  The reduction of some responsibilities, a change in reporting structure and sometimes, a change to the terms of a bonus plan, are all the types of changes that may not lead to clear results.

What about geographic relocation?  Can employees be asked to move as part of their employment?  Intuitively, one might have thought the answer would usually be “no.”  Although this might often be the case, the legal answer can depend on the context and the particular background.  Has the employee moved around before as part of the position?  Is the industry one in which employees are routinely expected to relocate?  Is the employer paying for moving expenses?  Is the employer offering any other alternatives?  These are all factors to consider.

In a recent case, the Alberta Court of Appeal (Robin Brown v. Pronghorn Controls Ltd.) held that a transfer from Red Deer, Alberta to Sedgwick, Alberta, approximately two hours away, was not a constructive dismissal.  The Court held the employee would be a branch manager in both places and would be entitled to the same terms and benefits, despite the disruption to his family life.

The Court of Appeal’s view was probably influenced by the fact that the employee had also refused another alternate position with the company in Red Deer and went on to find new employment, at a higher rate of pay elsewhere, quite quickly.  The Court looked at the background and history of Brown’s employment and applied those facts to conclude that this would have been a reasonable move.  In making its decision, the Court relied on a 1989 decision of the Ontario Court of Appeal (Smith v. Viking Helicopter) in which the Court had held that it was not a constructive dismissal to require an employee to move from Ontario to Quebec in the particular facts of that case.

This recent ruling from Alberta is not necessarily a definitive statement of Canadian law.  Other courts in other jurisdictions across Canada have taken and may well continue to take different approaches.  However, in determining whether a proposed transfer is a constructive dismissal, Canadian courts are likely to look at a number of factors including the following:

  1. Is there an employment contract in place?  If so, does it permit the employer to relocate the employee?
  2. Has the employee moved for work purposes while working for this employer?  Has the employee moved for professional purposes in the past, with other employers?
  3. Is the proposed position equivalent in compensation, benefits and opportunity?
  4. Will the employer be paying for all moving costs?
  5. Is there a reasonable business purpose to the proposed transfer (i.e. as opposed to some type of vindictive relocation proposal).
  6. Is the employer offering an alternative?

These are some of the questions that should be considered carefully when evaluating the likely success of a constructive dismissal claim as a result of a proposed relocation.  The legal answer may not always be as predictable as one might have expected.  Setting up a proper paper trail and asking the right questions can certainly help.  But ultimately, taking the wrong steps can be risky and costly, particularly, as with many other constructive dismissal claims, if there are other reasonable alternatives.

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