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Employer Restructuring and Transitions: An Important Contextual Factor in Constructive Dismissals

Submitted by Firm:
Roper Greyell LLP
Firm Contacts:
Gregory J. Heywood, James D. Kondopulos
Article Type:
Legal Update
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Article by: Andrew Peng

Previously printed in the LexisNexis Labour Notes Newsletter.

In Costello v. ITB Marine Group Ltd., 2021 BCCA 154, the BC Court of Appeal upheld a trial judge’s finding that the plaintiff had not been constructively dismissed from her employment when some of her employment duties were changed as a result of her employer’s restructuring.

Summary of the Facts

The plaintiff, Ms. Costello, was employed by ITB for 34 years.  She worked as an office manager, working out of an office located in North Vancouver.  ITB sold one of its two operations in 2018, and planned to close the office in North Vancouver.  It informed Ms. Costello at a meeting in late September 2018 that she would be relocated to its office in Burnaby, effective January 2, 2019.  During that meeting, Ms. Costello expressed her apprehension about the sale.  She was concerned that she would have little to do afterwards.  ITB reassured her that there would be work for her.

The move to Burnaby did not go well for Ms. Costello.  She was put in an office which she considered to be unsafe and unsatisfactory.  She was moved to another unsatisfactory office, and was then permitted to work from home.  Her primary complaint, however, was that she had been stripped of all employment duties.  She found she had little to do.

Ms. Costello brought her complaints to her employer’s attention in an e-mail dated January 21, 2019, and described her circumstances as “disrespectful, embarrassing, unsafe, untenable and unbecoming of [her] 34 year tenure”.  ITB arranged to meet with her on January 24, 2019 to discuss her concerns.  At that meeting, when asked what she wanted, Ms. Costello told ITB she wanted “a settlement”.  The next day, Ms. Costello’s counsel wrote to ITB and stated, “Ms. Costello accepts your recent conduct as a repudiation of her contract.  Accordingly she has been constructively dismissed.”

BC Supreme Court’s Decision

The trial judge held that Ms. Costello had not been constructively dismissed from her employment.  While some of her day-to-day responsibilities had been impacted, the judge attributed those changes to the transition which had occurred at ITB following the sale of its operations, and found that some of the changes had been necessary as a result of restructuring.  The trial judge also found that Ms. Costello’s duties remained consistent with her prior role, and her contract of employment only required her to be provided with work which was appropriate for her qualifications and skills.

Importantly, the trial judge held that ITB had to be allowed a reasonable time to manage the transition, and found that Ms. Costello had not afforded her employer the opportunity it needed.  ITB only became aware of Ms. Costello’s complaints after receiving her e-mail and responded within days.  The judge concluded that Ms. Costello was uninterested in learning more about the projects planned for her and, instead, had shifted her focus to securing a severance package.

BC Court of Appeal’s Decision

Citing a number of cases in which plaintiffs had acted prematurely by leaving their employment without confirming whether a restructuring would in fact affect their jobs, the BC Court of Appeal held that these are highly fact-driven situations and inquiries.  The Court highlighted the importance of the fact that ITB had sold a portion of its operations and was going through a restructuring.  All of that, the Court of Appeal held, informed the analysis of Ms. Costello’s concerns regarding her workload and work environment.  Further, the Court confirmed that an employer is entitled at law to determine how the workplace will be organized and work will be performed, subject to its contractual obligations to employees.  The Court unanimously concluded that the trial judge had committed no palpable and overriding error in holding the plaintiff had not been constructively dismissed.

Takeaways

This case is a good reminder that a contextual approach is required when determining whether there has been a constructive dismissal.  When an employer is in transition as a result of a legitimate restructuring, the employer will be afforded some flexibility within the limits of the contract of employment.  Further, in this case, the employer’s timely response to the complaints made by the employee – together with its commitment to provide her with significant work consistent with her position in the future – shaped the conclusion that a reasonable person in those circumstances would not have concluded the essential terms of his or her employment contract had been substantially changed.

 

Andrew Peng is an associate at the Vancouver-based employment and labour law boutique of Roper Greyell LLP.  He practises in all areas of workplace law with a focus on labour relations, wrongful dismissals, and health and safety matters.  He can be reached at apeng@ropergreyell.com.  For more information about Andrew and Roper Greyell’s other lawyers, please visit www.ropergreyell.com.

While every effort has been made to ensure accuracy in this article, you are urged to seek specific advice on matters of concern and not to rely solely on what is contained herein.  The article is for general information purposes only and does not constitute legal advice.

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