One of the realities of running a business is that sometimes an employee’s role has to change in order to ensure the efficient operation and, in some cases, the survival of that business. Unfortunately, despite an employer’s well-meaning intentions, this kind of business decision can result in liability for constructive dismissal.
This was the situation before the Ontario Court of Appeal in Farwell v. Citair, Inc. (General Coach Canada), 2014 ONCA 177 where a 58 year old VP of Operations with 38 years of service was returned back to his former position as a Purchasing Manager by the employer.
Employment Law: Constructive Dismissal
Unlike a wrongful dismissal, a constructively dismissed employee has not actually been dismissed. Instead, the employer has made fundamental changes to the employee’s job without the employee’s input or agreement. In effect, the changes made by the employer are so drastic that the job the employee accepted at the start of the employment relationship no longer exists. Hence, the term “constructive dismissal”, a dismissal implied by operation of law.
At trial, the court held that Mr. Farwell was constructively dismissed and awarded him damages equal to 24 months of pay in lieu of notice. The employer appealed on three grounds:
- The trial judge misapplied the principles of the law of constructive dismissal;
- The trial judge erred in her assessment of damages; and
- The trial judge erred in failing to find that Mr. Farwell did not mitigate his damages by working for the employer as a Purchasing Manager during the notice period.
Employment Law: Ontario Court of Appeal
On the first ground of appeal, the Ontario Court of Appeal accepted the trial judge’s conclusion that the demotion back to Purchasing Manager from VP of Operations was a significant loss of status and prestige that constituted a fundamental change to the employment agreement and a constructive dismissal. With regard to the second ground of appeal, the court deferred to the trial judge’s assessment of damages and concluded that 24 months of pay in lieu of notice was reasonable for a 58 year old high-level manager who spent two-thirds of his life with the employer.
As for the third ground of appeal, the court acknowledged that the trial judge may have incorrectly taken a subjective approach in assessing that the stigma and loss of dignity was too great to mitigate by returning to work for the employer. In other words, rather than objectively considering if a reasonable person would return to work under the same circumstances, the trial judge may have focussed her assessment on what Mr. Farwell thought about returning to work for the employer. The court also acknowledged that, in light of the absence of any animosity between the parties, Mr. Farwell may well have been obligated to mitigate by working for the employer as a Purchasing Manager.
However, Mr. Justice Lauwers, writing for the court, pointed out, “To trigger this form of mitigation duty, the appellant was therefore obliged to offer Mr. Farwell the clear opportunity to work out the notice period after he refused to accept the position of Purchasing Manager and told the Appellant that he was treating the reorganization as constructive and wrongful dismissal.” Herein was the fatal flaw in the employer’s case. In order to successfully argue that Mr. Farwell failed to mitigate his damages by working as a Purchasing Manager during the reasonable notice period, the employer first had to offer the position after Mr. Farwell refused to accept the imposed changes.
Employment Law: Constructive Dismissal – Practical Considerations
The take-away for employers in this case is that it is not safe to assume that the employee is always free to accept the position unilaterally imposed on him in order to mitigate his damages. Once the employee has rejected the change, the employment agreement is at an end. In order to bolster the mitigation argument, the employer must then make it clear to the employee that the very same position that led the employee to assert constructive dismissal is still available to mitigate damages.
For the employee, the take-away is that it is important to assess the workplace atmosphere before claiming constructive dismissal. Depending on the circumstances, the employee may be obligated to return to work for the employer in order mitigate his damages, despite whatever hard feelings he may bear towards the employer.
As I stated in a previous blog post, employment law, and constructive dismissal in particular, can be a lot like a chess match. It is often beneficial to have competent employment counsel advising you on how to best respond to the moves that the other side makes.
This article is intended only to provide general information and does not constitute legal advice. Should you require advice specific to your situation, please feel free to contact me to discuss the matter further.
What to expect when you are litigating – the case conference
The Case Conference in a divorce case is usually the first opportunity for parties to hear a Judge’s view of their case. If both parties have lawyers, depending on the judge, a Case Conference may be held in the Judge’s chambers (office) without the parties present. It is then up to the lawyers to convey to their respective clients what was said about the custody, access, equalization and other financial issues being discussed. At times, a judge will then speak directly to the parties in the courtroom.
If the Case Conference is in the Courtroom, the Judge will sit at the front of the room, at a raised desk. In front of him or her are several court staff – the deputy (who escorts the Judge into the courtroom through a special door); the registrar and the court reporter, who records everything that is being said. The recording is not published.
The parties and, if they have one, their lawyers, sit facing the Judge and staff. Usually, the lawyers will make submissions and the parties do not speak; at times, a Judge might ask you a question directly. You should stand to respond unless told otherwise by the Judge. Then the Judge will give his or her views of the case, and make recommendations. Orders can be made on consent at the conference or, if proper notice has been given, the Judge may make an order even if the both sides don’t agree to it. Child support may be ordered even without the consent of both parties depending on the circumstances.
Conferences require Briefs, but these documents (which follow a specific format) are not kept in the court file after the hearing. They are returned to the parties after the conference or shredded. It is essential to prepare detailed and up-to-date Briefs that inform the Judge, and the other side, about the facts you are relying on and what position you are taking on custody, child support, equalization and any other issues involved in your divorce.
A family law case will go through several conferences, usually at least two or three, before being placed on a trial list, to give the parties ample opportunity to resolve the issues on consent.
Written by Simonetta A. Lanzi
It is a sad fact that more than 40% of marriages end in divorce. In addition, some marriages end in a permanent separation but no divorce and are therefore not included in divorce statistics. Despite this high rate of marriage failure, prenuptial agreements remain rare. Of course, it’s easy to understand. Nothing puts a damper on wedding preparations faster than sitting down with lawyers to discuss what happens if your relationship doesn’t last “till death do us part”.
Do You Need a Prenup?
Fortunately, many people do not require a prenuptial agreement. If you do not have children from a prior relationship, own a house, have significant assets, or earn a very large income, while a prenuptial agreement may be of assistance, your rights will probably not seriously be affected by not having one. However, there are many cases where the absence of a prenuptial agreement has a severe effect on one or both spouses if their marriage ends.
The most significant example and the most common in my experience is where one party owns a property before marriage which subsequently becomes a matrimonial home. According to s. 18 of the Family Law Act, a matrimonial home is defined as “every property in which a person has an interest and that is or, if the spouses have separated, was at the time of separation ordinarily occupied by the person and his or her spouse as their family residence …”. For the purposes of property division after a marriage has ended, this means the home or homes you and your spouse lived in on the date you separated. You can have more than one matrimonial home on the date of separation, typically a cottage or other vacation property. You should ask a lawyer whether your vacation property qualifies as a matrimonial home as in some cases it will not.
The Family Law Act in Ontario
Before I explain why sole ownership of a property which becomes a matrimonial home is so significant, I need to explain how property division in Ontario (and most provinces) works on marriage breakdown. In theory, it is a simple process: with a few notable exceptions (see s. 4(2) of the Family Law Act), you are essentially dividing all assets that accumulated during the marriage. You calculate your net assets on the date of marriage, and again on the date of separation, and arrive at what is referred to as your net family property. Your spouse does the same calculation. Whoever has the highest net family property makes a payment to the other spouse to equalize the amounts. This payment is known as an equalization payment.
Unfortunately for many people, the notable exceptions I mentioned often produce unfair results. There are many examples involving inheritances, gifts and damages awarded by a court. I will address some of these examples in other blogs. However, in my experience, it is an exception that relates to the value of a matrimonial home on the date of marriage that causes the most trouble. This exception to the straightforward division of assets can be found in the definition of net family property in s. 4(1) of the Family Law Act. The definition specifically removes the value of a matrimonial home from the calculation of assets owned on the date of marriage. The significance of this cannot be overstated. What it means is this: if you own a home or vacation property on the date of marriage which becomes a matrimonial home and remains so until the date of separation, you must include the entire value of the property in the calculation of net family property, not just the increase in equity which accrued during the marriage.
Here’s an example to make it clear: assume you had $300,000 in a bank account on the date of marriage and you just left it there until you separated. Over the course of the marriage it earned $50,000 in interest. If neither party had other assets or debts, you would pay your spouse one half of the accumulated interest on separation, or $25,000. Now, assume you owned a home on the date of marriage with $300,000 equity and you still resided in that home with your spouse on the date of separation. During the marriage the equity in the home increased to $350,000. If neither party had other assets or debts, now you owe your spouse half of $350,000 or $175,000. In this example, you owe your spouse an additional $150,000 because your date of marriage asset was a matrimonial home rather than a bank account.
Divorce & Family Law: What Should a Homeowner Do?
It is not often that I can offer simple solutions to such a serious issue, but in this case I am please to be able to do so. Perhaps that is why the Ontario government has ignored the recommendations of the Ontario Law Commission for the last 20 years to change this unfortunate law. In any event, there are two ways to avoid the unfair result of this matrimonial home exception.
This first solution is to enter into a prenuptial agreement. If you are already married, you can enter into a marriage contract and still accomplish the same thing. I cannot emphasize enough that this document should be drafted by an experienced family law lawyer.
But what if your spouse refuses to sign a prenuptial agreement or marriage contract? The solution is actually more straightforward and reliable from a legal perspective. Sell your home or vacation property after you get married but before you separate. Once the home is sold, it can never be a matrimonial home and you will be able to preserve your equity in the property as a date of marriage asset. Your date of marriage equity will still be preserved even if you invest the sale proceeds in another property. This solution does not depend on an agreement the validity of which may be challenged by your spouse after separation.
For those residing in the Pickering, Ajax, Whitby and Oshawa area, here are some helpful links to local resources:
Durham Family Court Clinic:
Family Law Information Centre, Oshawa:
Michael Reilly is a family law lawyer and mediator practising in Pickering Village, Ajax, Ontario.
Reilly and Partners Personal Injury Law Ajax, ON
Personal injury occurs where you have suffered some form of injury, either physical or psychological, as the result of an accident. When you suffer a serious injury, the impact on your life can be overwhelming. Many difficult decisions have to be made. Many questions will arise. Who will pay for the cost of my therapy? How can I recover these out-of-pocket expenses? What can I do about my loss of income? What compensation am I entitled to?
It is difficult to assess damages in the early stages of a personal injury case. In most circumstances the true cost of an injury is unknown until you have received medical treatment, therapy and rehabilitation. That is why it is important to seek legal representation at the beginning of the process to ensure you are receiving the necessary funding for the treatment required.
There are many factors to consider when assessing the value of a personal injury claim including the nature of your injury, the cause of the injury and the impact that the injury has on your ability to work and on the activities of daily living.
Common damages awarded in a personal injury case can include;
Medical Treatment – The cost of medical care associated with the accident including, reimbursement for expenses for medical treatment you have already received and compensation for the estimated cost of medical care you will require in the future as a result of the accident.
Pain & Suffering – You may be entitled to compensation for pain and suffering you endured, or will continue to endure, as the result of the accident.
Income – You may be entitled to compensation for the accident’s impact on your salary and wages in the past and in the future.
Home Maintenance Services – You may be entitled to compensation for housekeeping and home maintenance services that you are no longer able to perform as a result of your injuries.
Property Loss – If any personal property was damaged as a result of the accident, you may be entitled to reimbursement for repairs or compensation for the fair market value of the property that was lost.
Family Member Claims– Family members may be awarded compensation for their financial losses related to the claim.
Whether you are injured in a slip and fall, an assault or even as a result of a faulty product, Reilly & Partners Professional Corporation has the experience backed by results to help you find the answers. If you have been injured, please contact us for a free consultation to discuss how we might be able to help you.