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hri_Admin asked 3 years ago
Currently we have an employee responsible for all of Canada in their role reporting into Corporate VP who is located in the United States. The VP is being terminated and we are looking at having the employee report to a job level below the VP, whilst there are others they could report into that were at the Corporate VP level. Also wanting to add to their responsibility a State to manage. Is this deemed as constructive dismissal? The employee is not comfortable with the change due to both the reporting structure and the add of American business which they have had no exposure to.
1 Answers
hri_Admin answered 3 years ago
It COULD be. But it depends on a lot of factors. Key question: Is this the ONLY change? Or does it also include a demotion or change in title? If so, constructive dismissal is more of a risk.
Is there any change to the VP’s compensation amount or structure? If there are any cuts or unfavourable terms, like making base pay contingent, the risks increase. There are also risks even if compensation stays the same to the extent the VP may not be getting consideration for the additional responsibilities you’re adding to his plate. But if compensation is increasing, the risks decrease.
Does the VP’s contract specify the reporting relationship? If yes, the CD risk level rises. Does the contract give you unfettered right to change the reporting relationship? If yes, the risk meter goes down.
Bottom Line: Constructive dismissal is definitely in play here. So, you need to weigh ALL of the factors very carefully. Or, you can take CD out of the equation by entering into a new employment agreement and ensuring the VP gets consideration, i.e., something of value that he/she didn’t have before, in exchange for any concessions being made. Remember that since the VP is already in your employ, employment doesn’t count as consideration. Hope this helps and talk to counsel if you can. Glenn
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