Constructive dismissal cases are always a challenge, as this cause of action requires, or may require, that a person leave otherwise secure employment in exchange for a lawsuit which could prove to be an uphill battle.

One aspect that might prove challenging for a plaintiff is post-dismissal events, and whether or not they are admissible as evidence. We will examine why such events may play an important role in deciding a constructive dismissal case below. The leading case on constructive dismissal from the Supreme Court of Canada determined that evidence as to events occurring post-dismissal was not relevant to the issue at hand unless such evidence could have been reasonably foreseen at the time of dismissal.

Post-Dismissal Occurrences: Why Might They Matter?

Constructive dismissal occurs when an employer drastically or fundamentally changes the terms of employment or clearly indicates an intention to do so. One might think that if, for example, a person’s salary is cut in half, this would have the effect of changing the terms of employment and result in constructive dismissal. In many cases, that would be correct. However, this is where post-dismissal events may come into play.

Take, for example, an employee who is told that their salary will be reduced by 35%, but that they will receive a year-end bonus commensurate with the company’s annual profits. The employee then resigns and brings an action against their former employer for constructive dismissal. If the company’s profitability was unknown at the time of this change to the employee’s income, the ultimate amount of the bonus will be irrelevant in the constructive dismissal action, because it was an unknown quantity at the time of dismissal and the employee could not rely on the fact that the bonus might make up for the lost portion of their salary. If, however, the profitability was known at the time and the company could demonstrate to the employee at the time of the change that the bonus would have brought the employee’s income reasonably close to their former salary, it may be allowed as evidence at trial.

Nova Scotia Court of Appeal – A New Twist on Admissibility?

A recent decision added a new level of complexity to this issue. In this case, which is similar to the example posed above, the plaintiff was an advertising sales representative at a local newspaper, paid by commission. His position was eliminated and an alternate position was offered to him, selling other products of the newspaper to clients, and similarly commission-based.

The plaintiff initially accepted the new role, but quickly came to the conclusion that his income would drop by 30% in the new role. His employer, on the other hand, was much more optimistic and had made certain assurances to that effect. The plaintiff, unconvinced, quit his job and brought an action for constructive dismissal.

The company wished to lead evidence at trial to show the contrary, a position that was denied by the trial judge, who relied upon the prevailing common law and determined that the post-dismissal evidence was not relevant.

The Court of Appeal thought otherwise and allowed the employer to introduce evidence about the income that the plaintiff would have earned, had he remained in the role. The accepted theory was that the employer’s stated view of the expected income was important to determine what a reasonable person at the time would have believed. The actual results were then allowed to rationalize the employer’s prediction as expressed at the time the offer was presented. The theory of the decision was that the results were allowed to be introduced to test the reality of the employer’s expectations. This adds a new element to the previous cases, where the post-dismissal events must have been reasonably foreseeable at the time of dismissal. In this case, the employer was optimistic about the sales forecasts and made assurances to that effect, but had not been in a position to demonstrate that at the time.

The trial decision was hence set aside and the claim was dismissed. It remains to be seen whether this case will indicate a trend in broadening the admissibility of evidence relating to post-dismissal events in constructive dismissal actions.

Employees Should Carefully Consider Their Actions in Advance

The case above illustrates the risk an employee faces when deciding whether to leave a secure job and bring an action for constructive dismissal. In the case at hand, the risk failed and the plaintiff is now left facing paying their former employer’s costs of litigation, totalling over $20,000.00. Any employee considering such an action would be advised to seek legal counsel from an experienced employment lawyer in order to properly assess their circumstances and the likelihood of their success at trial.

Get Advice and Know Your Rights

The law is certainly dynamic and not capable of concrete prediction. For guidance on his issue, and indeed, on and all employment law matters, contact the offices of Toronto employment lawyers Grosman Gale Fletcher Hopkins LLP. We regularly advise workplace parties on a wide range of legal workplace issues. Contact us online or by phone at 416-364-9599 to schedule a consultation.