Torkin Manes LegalPoint
May 22, 2020

Demoted Long Service Employee Receives 28 Month Notice Period and Aggravated Damages

By Shreya Patel

In a recent decision, an employee was awarded 28 months of reasonable notice upon his constrictive dismissal.

At the time of his dismissal, the employee was 58 years old, employed in the position of a Sales and Service Technician and earned an annual salary of $62,000 and 3% to 5% commission on sales.

In or around January 2017, the employee was advised by his employer that his position would be “realigned”. As part of this realignment, the employee would work as a Project Technician and this role required him to work on the plant floor.

Specifically, as a Sales and Service Technician, majority of the work activity was conducted in the employee’s office doing sales and related administrative work as well as building machines in the clean build area. Only about five percent of his time was spent on the plant floor consulting on how to fix problems with the machines with bargaining unit employees performing any repair work necessary to those machines. In contrast, the Project Technician job involved rebuilding machines and maintenance work with 100 percent of the employee’s time being spent in the physically challenging environment of the plant floor.

As a Project Technician, the employee would also not be responsible for sales and his sales commissions would be eliminated.

Further, the Sales and Service Technician job was a salaried non-union job. In contrast, a significant portion of the Project Technician job involved bargaining unit work.

Based on these changes, the court held that a reasonable person in the same situation as the employee would have believed that the essential terms of the employment contract were being substantially changed. These changes were not a “minor tweak”. Accordingly, the court agreed with the employee that he was constructively dismissed by the employer.

Notably, the Court found that the Plaintiff was not required to mitigate his damages by working in the revised role as doing so would have been “deeply humiliating”.

Finally, the Court also found sufficient “bad faith” conduct to justify an award of $25,000 to the Plaintiff.  While the evidence does not disclose any truly egregious conduct, the Court was clearly interested in protecting the rights of a very long-service employee who was demoted.

As businesses plan to reopen amidst COVID-19, employers may have to realign or restructure certain position, reduce salaries for employees or reduce their normal work hours. These changes  may result in materially changing the terms and conditions of an employee’s position, thereby triggering constructive dismissal.  However, it is important to note that this case was decided pre-pandemic and could be distinguished going forward. Employers can mitigate certain risks by proposing amended employment agreements or by ensuring that the revised position is reasonable and would not be embarrassing for the employee subject to the change.

Our team of human resource lawyers regularly assists employers in instituting best practices to mitigate risks of constructive dismissals.

If you have any questions about COVID-19 and your workplace, or any other human resource law issue, please contact a member of our team. For more information about dealing with COVID-19, please visit our COVID-19 Resource Center.