Thursday, 12 April 2012

That’s How One Makes Fundamental Changes!

In an earlier post I commented on the case of Chandran v. National Bank, 2012 ONCA 205.  In that post I commented that, “the bank’s more tactical move should have been to terminate Mr. Chandran’s employment as a senior manager - on appropriate notice - and then offered him the alternative positions within the bank.  Had proper notice been provided, the bank may have removed the possibility of a suit and its related costs.”

In making that comment I was employing the analysis set out in the Ontario Court of Appeal’s decision in Wronko v. Western Inventory Service Ltd., 2008 ONCA 327.  A recent case from the Ontario Divisional Court, Kafka v.Allstate Insurance Company of Canada, 2012 ONSC 1035 would appear to affirm that position.

Decision in Kafka

In Kafka several employees of Allstate Insurance sought to bring a class action proceeding against their former employer for statutory notice and severance damages for constructive dismissal. It was clear that Allstate had made some serious fundamental changes to the employee’s compensation structure, as well as other changes.

The issue, however, was whether Allstate had provided sufficient notice of these fundamental changes.

Writing for the three-member panel Justice Harvison Young held that:

[45]           In short, the Wronko analysis does not change or purport to change the law established by the Supreme Court in Farber, which affirmed that a fundamental change does not amount to a constructive dismissal where the employer provides the employee with reasonable notice of the change.  [Emphasis my own.]


The takeaway for employers is should an employer wish to make a fundamental change to an employee’s employment (and one should note that whether or not a change is “fundamental” will always depend on the individual, see e.g. paragraph 28 of the Kafka decision) the employer must provide sufficient notice of the change.

If the employee does not wish to accept the change, then the employee would be well-advised to use the notice period to seek new employment.  If the notice period is insufficient, then the employee might wish to consider a constructive dismissal action.  For that, legal advice would be most prudent.

As always, everyone’s situation is different.  The above is not intended to be legal advice for any particular situation and it is always prudent to seek professional legal advice before taking any decisions on one’s own case.
Sean Bawden is an Ottawa, Ontario employment lawyer and wrongful dismissal lawyer.  He tweets from @SeanBawden.

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