May 26, 2014
A trial level decision from Nunavut released last year held that an employee’s attempts to negotiate a separation package by way of a demand letter from her legal counsel to her Employer indicating that she had been constructively dismissed but that she was prepared to continue working while terms of a package were negotiated, amounted to a repudiation of the employee’s employment agreement.
The employee at issue relocated from Toronto to Nunavut to take on the position of Executive Assistant to the CEO of the Employer. Following a reorganization thereafter, the employee’s responsibilities had been redistributed such that she was no longer exclusively providing assistance to the CEO. Shortly after this reorganization, the Employer issued a job posting for a corporate secretary position, which the employee perceived to be her old job. The Employer then asked the employee if she wished to apply for the position.
In response, the employee’s legal counsel sent a letter to the Employer indicating that the employee was in a position to pursue a constructive dismissal claim but that she was willing to enter into negotiations for a separation package. The Employer responded by alleging the demand letter amounted to insubordination, and then summarily terminated the employee’s employment. The employee commenced an action for constructive dismissal.
The court dismissed the employee’s claim finding she had not been constructively dismissed. Surprisingly, however, the court did not go on to conclude that the actions of the Employer in summarily terminating the employee’s employment amounted to a wrongful dismissal. Rather, the court found that employee counsel’s demand letter amounted to a repudiation of the employment relationship. The court held:
“While clearly the cases are fact-driven,…. It must be clear from the circumstances, viewed objectively, that the employee intends the employment relationship to end. Whether or not it is reasonable to expect that the employee can return to the workplace, even for a short time, will depend on the position held by the employee and the harm done to the employment relationship.”
In reaching this conclusion, the court considered the following facts:
- by the time the letter was sent, the employee’s discontent in the workplace had been made known to the employer;
- the letter did not attempt to resolve differences;
- it was not an available option that the employee would return to her role indefinitely;
- the employee had decided she no longer wished to be employed there;
- the letter was copied to numerous people including members of the board and the Ministry in an attempt to politicize the matter and exert external pressure on the company;
- the employee was privy to sensitive and confidential information; and
- the position required a high level of trust and required a high level of confidence from her superiors.
This decision is a marked departure from existing practice and law. Not surprisingly, an appeal of this decision is expected to be heard this fall. In the interim, this decision, although highly fact driven, is a sobering reminder to employee counsel that issuing a demand letter on behalf of an employee client alleging constructive dismissal is not without risk. Caution and conservatism when issuing any such letters should always be considered to avoid a similar unintended and unexpected results for employee clients.