The Superior Court of Justice awarded $1.3 million to a constructively dismissed employee who was on a fixed-term contract. This was one of the largest damages awards given in Canadian employment law. In cases like these only experienced employment lawyer like Stacey Ball can help.

Grant McGuinty (plaintiff) was the owner of a successful funeral home that he sold to the Defendant corporation after a down-turn in the economy. The share purchase agreement contained a term requiring the Plaintiff to enter into a Transitional Consulting Services Agreement (“TCSA”) whereby the Plaintiff would provide consulting services to the Defendant company for ten years. The duties of the Plaintiff were the general management of the funeral home and he was identified as a “key employee” in the TCSA. There was no termination provision in the TCSA and following certain actions of the defendant, Grant commenced a constructively dismissal lawsuit. The actions that led to the claim constituted the following:

(a) Grants vehicle was taken away

(b) His desk was removed to the basement

(c) Grants commissions of 65% were not paid to him as part of the TCSA

(d) Grants hours of work began to be tracked by a subordinate employee, whom Grant supervised and without notice to him

(e) The locks were changed without notice to Grant

Ultimately, the cumulative effect of the above conduct led the court to conclude that the test for constructive dismissal had been satisfied and that a reasonable person in the Plaintiffs position would conclude that the Defendant no longer had intentions to be bound by the employment contract. Given the absence of a contractual provision providing fixed-term notice, a fixed term employment agreement binds employers to pay employees until the end of the term.

Grant was entitled to the benefits and compensation he would have received had the ten-year contract been honoured. While the Defendant argued that the Plaintiff had acquiesced to the alterations and that he was precluded from his claim, the Court ultimately rejected that argument and found that acquiescence requires clear acceptance of the varied terms. While acceptance may be inferred by remaining in an altered position for a significant time, the Plaintiff in the case at bar had in fact gone on medical leave, which did not constitute acquiescence.

It is important for employers to ensure that a clear early termination provision is written into their fixed-term contracts of employment. If you not, full payment for the duration of the contract will have to be awarded to the employee. For employees seeking to claim constructive dismissal, ensure that a significant duration of time has not passed in the new altered position. Be aware as to how courts construe acceptance of new terms. The above case was a clear situation of a medical leave.

Call our office at 416-721-7997 ext 222 for a Toronto employment lawyer to help you in your case.

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