Constructive Dismissal

In a recent Ontario case against the Liberty Insurance Company of Canada, some employees sued Liberty Insurance for constructive wrongful dismissal in changing their minimum performance requirements and compensation plan. Some employees refused to accept the new compensation plan and were terminated by the company on the grounds that they had repudiated their contract of employment.

The Court held that the failure of the employees to accept the new compensation scheme, before having had reasonable time to assess the new terms, did not constitute repudiation. The Court stated specifically that employees are entitled to reasonable time to assess changed conditions before they are forced to take an irrevocable position. This case reinforces the law that while employers may unilaterally change employment conditions, an employee does not have to agree to such changes and if, after reasonable time, it turns out that those changes were adverse, the employee will be entitled to claim damages for constructive wrongful dismissal.