Reassignment of CN Employee a Constructive Dismissal

A BC employee has successfully asserted a claim for constructive dismissal after being reassigned to a new position. Younger v. Canadian National Railway Company is a good reminder for employers that the courts may find there has been a constructive dismissal where an employee has been reassigned to a new position involving fewer responsibilities and a reduction in pay.

Younger had been a railway employee since graduating high school in 1973. He started working as a labourer and eventually advanced to a management position at CN. In 2004, CN assigned Younger to the position of Assistant Superintendent Mechanical ("ASM"), which required that he supervise the operations of three major and three minor facilities. The position required Younger to be on call 24/7 and to be responsible for the safety and productivity of approximately 100 employees. In 2005, he was reassigned by CN to a position which only required that he supervise one facility and work a maximum of 40 hours a week. In the new position, Younger would only be responsible for 10 employees and would fall 2 positions on CN's 12 position pay scale. As part of the reassignment, CN agreed to pay Younger his current salary for a year; at the end of that period, his wage would be reduced to the new position’s lower pay scale.

Younger declined the position transfer, alleging it was demotion, and refused to report to work after the reassignment. Younger found comparable employment five months later.

CN argued that it was entitled to reassign Younger because he was still in an "implied probation period" following Younger's initial 2004 promotion to the ASM position. The court accepted that there may be cases in which there is an implied probation period following an employee's promotion, during which time an employer may be able to return the employee to his or her former position without being found to have fundamentally breached the contract. However, this was not one of those cases. At the time of Younger's 2004 assignment to the ASM position he had been working in a comparable position for about 5 years. As such, the ASM position could not be considered a "promotion" and CN's reassignment to a lower position could not be considered a "return to a former position".

The court agreed with Younger that CN's reassignment was not a lateral transfer but a demotion. This demotion amounted to a fundamental breach of Younger's employment contract as the differences between the positions “amounted to substantial changes to the employment contract”.

This case stands as a reminder that employers must take care when reassigning their employees and ensure that transfers which are done without an employee’s consent or without reasonable notice are of a lateral nature rather than a demotion. While we have previously discussed here how the Courts will provide some deference to employers, it does not extend to situations where the employee’s new position is a substantial demotion.

Employers may also want to consider making promotions subject to an express probationary period, during which the employee can be returned to his/her previous or a comparable position without a fundamental breach of contract.

CN has applied to appeal the decision.

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