Top 5 Takeaways from the Supreme Court’s Recent Decision on Constructive Dismissal

The recent Supreme Court of Canada case – Potter v. New Brunswick Legal Aid Services Commission (“Potter”) - has received much attention. The Supreme Court found that an indefinite suspension with pay, coupled with delegation of powers to another employee, was a constructive dismissal.

In our view, Potter does not represent a change in the law. Rather it is a reminder of the dangers of unpaid suspensions that most employers were already aware of. It is also a reminder that every case of potential constructive dismissal must be analyzed on its unique facts. The following are the top 5 takeaways from Potter:

  • Consider including a clause in your employment agreements that explicitly allows the employer to suspend an employee with or without pay, and to modify and remove duties as necessary, during an investigation;
  • To the extent that employer handbooks or policies address the discipline process, be sure to include the above noted clause in those as well. You don’t want your employment agreements to conflict with your policies;
  • Only suspend an employee when there are reasonable grounds to do so. If an employee is under investigation for misconduct, depending on the allegations, it may be more reasonable to keep the employee at the workplace, perhaps with some type of modified duties or assignments;
  • Paid suspensions are easier to justify than unpaid ones. Employees are also less likely to raise a constructive dismissal argument during a suspension if they keep getting paid; and
  • When suspending an employee, whether it is paid or unpaid, give the employee clear reasons for the suspension. Put the reasons in writing and provide enough detail that is reasonable in the circumstances. An employee should not be wondering why they are sitting at home instead of working.

Potter v. New Brunswick Legal Aid Services Commission, 2015 SCC 10

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