In Mata, 2024 CIRB 1141, the employee complained that she had been constructively dismissed by her employer after she was placed on a leave without pay for failing to adhere to the employer’s vaccination policies. While Vice-Chairperson Love ultimately determined the employee had not been constructively dismissed, he walked through the principles of constructive dismissal for federal employees covered by the Canada Labour Code.
Legal Basis for Constructive Dismissal Under the Canada Labour Code
Firstly, Vice-Chair Love indicated that, although the Code does not explicitly use the term “constructive dismissal”, this form of dismissals is ultimately incorporated into the Code. Citing the Federal Court of Appeal’s decision in Srougi v. Lufthansa German Airlines, Vice-Chair Love indicated that dismissal under the Code is “the implementation by the employer of his intention to unilaterally terminate the contract of employment binding him to his employee”. In other words, the concept of an unjust dismissal under the Code includes the idea of a constructive dismissal. Having determined that the Code’s unjust dismissal provisions also apply for constructive dismissals, Vice-Chair Love moved on to outline the legal test to determine whether a constructive dismissal has occurred.
Tests for Constructive Dismissal
As Vice-Chair Love indicated, there are two potential methods whereby a constructive dismissal may occur. The first is when the employer makes a single unilateral change that constitutes a substantial breach of the employment contract. The second is when the employer engages in a series of acts that demonstrates it no longer intends to be bound by the contract of employment. In either circumstance, the employer will have repudiated the employment contract through its conduct, hence the employee will have been constructively dismissed.
Beyond the two potential avenues for constructive dismissal, Vice-Chair Love also cited the Supreme Court’s decision in Potter regarding the two-stage analytical process used for constructive dismissal. Vice-Chair Love indicates that the two-stage process applies for instances of a single unilateral breach. The first stage requires the decision maker to determine whether the employer breached the contract, considering whether the employer had the authority to make the changes to the contract, and whether the employee essentially condoned the change. The second stage considers whether a reasonable person in the same situation as the employee would have felt that the essential terms of the contract had been changed. In circumstances where the constructive dismissal arises from a series of acts, the question revolves around whether the cumulative effect of the acts shows the employer no longer intends to be bound by the employment contract.
Application to the Facts of the Case
After laying out the fundamental principles underlying constructive dismissal in a federal context, Vice-Chair Love examined how the law might apply to the facts of the case. In particular, the complainant was concerned that she had been constructively dismissed when she was put on a leave without pay in response to her vaccination status. While unpaid suspensions can in some contexts demonstrate a constructive dismissal, it is important in the first place to determine whether unpaid suspensions were contemplated in the contract of employment. In other words, if an employment contract provides for unpaid suspensions, it may limit the ability to pursue a constructive dismissal case. In this case, while unpaid leaves were not originally part of the employment contract, they did become part of the employment contract through the employer’s ability to make reasonable rules affecting the workplace.
As Vice-Chair Love indicates, an employer has the right to make reasonable rules for the management of its workplace, but there are some constraints to these rules in the context of unjust dismissals. Rules that are introduced to the workplace follow the KVP test. In particular, unilaterally introduced rules in the workplace:
- Must not be unreasonable;
- Must be clear and unequivocal;
- Must be brought to the attention of the affected employee before the employer can act on it;
- The employee must be notified that the breach of such a rule could result in discharge, if it is used as a foundation for discharge; and
- The rule should be consistently enforced from the time the employer introduced it.
It is precisely these features that Vice-Chair Love considered regarding the new leave without pay policy. In short, Vice-Chair Love noted that the employer made a reasonable rule for the health and safety of its employees in requiring vaccination status to be reported. Furthermore, he noted that the rule was clear and unequivocal and had been brought to the complainant’s attention. On top of that, the employee was notified that breach of the rule could result in discharge, and that the rule had been consistently enforced as others were also placed on leaves without pay. Ultimately, however, Vice-Chair Love noted that the employee was never dismissed, as she was later permitted to, and actually did, return to work after updating her vaccination status. Nevertheless, this case provides helpful insights to constructive dismissal issues in federal workplaces.