Constructive dismissal lawsuits can be very challenging. Many judges seem to feel that employees should continue to work for their empl0yers even if significant employment terms have been changed. Nevertheless, where an employee is faced with a significant reduction in compensation or a clear demotion, a constructive dismissal suit may be appropriate and successful.
In a recent Ontario Superior Court decision, Jodoin v. Nissan Canada Inc. a former employee of Nissan Canada was awarded more than $100,000 in wrongful dismissal damages as a result of a successful claim for constructive dismissal.
Harry Jodoin had been working for Nissan for more than 10 years. Just before his demotion, he was a Senior Manager in charge of retail sales and sponsorships. He controlled a budget of more than $30 Million.
In December 2010, Mr. Jodoin was told that he was being moved into the role of Senior Manager of Vehicle Preparation Programme. There was no job description for this position. No employees would report to Mr. Jodoin. There was no private office, no budget and no long term goals in place. In fact, Mr. Jodoin was initially moved from an office into a cubicle in a high traffic area with little privacy.
The court accepted all of this evidence and concluded that Mr. Jodoin had been constructively dismissed by Nissan. In coming to this conclusion, the court held that since Mr. Jodoin had been demoted, he was not required to continue to remain in the position (as a way of “mitigating his damages.”). The court noted that Mr. Jodoin continued to work for about a month and a half before taking the position that he had been constructively dismissed. However, the court concluded that this was a reasonable time period.
The court awarded Mr. Jodoin damages for the full time that he was out of work, which in this case amounted to approximately 9 months. The damages included compensation for base salary, benefits, the company vehicle, the incentive plan and the RRSP plan. This all added up to more than $100,000 plus interest and legal costs.
This case demonstrates that constructive dismissal law suits are still alive and well in Ontario. However, an employee bringing this type of claim will need to demonstrate an objectively clear demotion or a significant reduction in pay. Job changes that do not amount to a demotion may not be sufficient. Fortunately for Mr. Jodoin, he was able to convince the court that a reasonable, objective person would agree that he had been demoted. Many employees who allege constructive dismissal are not as fortunate.
Bringing this type of lawsuit in the wrong circumstances can be a very costly mistake. It can be come even less worthwhile if the dismissed employee is able to find new employment quickly. Nevertheless, employees who are out of work for some significant time period may find it quite worthwhile to proceed with this type of claim.