J. 1997 S.T. No. 07357 IN THE SUPREME COURT OF NOVA SCOTIA and TRURO INTERNATIONAL INC. DEFENDANT HEARD: At Truro, Nova Scotia, on the 4th day of December, 1997. BEFORE: The Honourable Justice Donald M. Hall. DECISION: December 17, 1997. COUNSEL: Peter Rogers, Esq., Counsel for the plaintiff. Peter Lederman, Esq., Counsel for the defendant. Hall, J. This is an action for damages for wrongful dismissal where the plaintiff contends that she was constructively dismissed without notice by her employer, the defendant. The Issues are the following: 1. Was the plaintiff constructively dismissed as result of changes unilaterally made by the defendant in the terms of her employment? 2. If there was constructive dismissal, at what point in time did the plaintiff have notice of the changes which constituted the constructive dismissal? 3. If the plaintiff was wrongfully dismissed, what is the appropriate period of notice that she is entitled to? 4. Should the fact that during her period of employment with the defendant, the plaintiff was absent from her employment for ten months on so-called maternity leave be taken into account to reduce the notice period she would otherwise be entitled to? 5. Has the plaintiff failed to militage? The plaintiff is now thirty-three years of age, married and the mother of two young children. She is presently unemployed and has been since her employment with the defendant ended. She began employment with the defendant in May of 1991. At the time she was paid $10.00 per hour and worked standard 37.5 hours per week. When her employment began with the defendant the Company's name was "McLean's Diesel Limited" and the principal owner at that time was man named Les Mclean. During the early period of her employment the plaintiff’s job related responsibilities included responsibility for accounts receivable, collection of accounts and service writing, which involved an explanation of the work that was done for customers pursuant to work orders. At times she looked after accounts payable and petty cash control. As well she was responsible for opening and distributing mail, doing filing and general correspondence, including typing. She was also the receptionist. In addition she prepared applications for customers seeking credit with the defendant. In January of 1993 the plaintiff received pay increase of ten percent and later the same year she received further increase of ten percent when the office manager employed by the defendant left and was not replaced. Initially the plaintiff received vacation pay at four percent of salary, but after she had been employed with the defendant for period or five years, the vacation pay was increased to six percent in accordance with company policy. This would, of course, be equivalent to three weeks vacation. In 1993 the Company was purchased by Ian D. Coveyduck and year later the name of the Company was changed to its present name, "Truro International Incorporated". Apparently considerable change over in staff followed Mr. Coveyduck's acquisition of the Company and it appears that the plaintiff is the last pre-Coveyduck employee of the defendant. In 1996 Wayne Teasdale, part-time accountant for the Company. came on the scene and recommended substantial changes in staff, systems and job descriptions, which were apparently adopted by Mr. Coveyduck on behalf of the defendant. In October of 1996, Mr. Teasdale queried the plaintiff as to whether her job could be done in 25 to 30 hours per week. Apparently she responded that it might be possible, and that it would have to be tried. At the time the plaintiff was pregnant and anticipated going on maternity leave in early January, 1997. It was planned that temporary replacement would have to be found for her. In furtherance of obtaining replacement an advertisement appeared in the local newspaper, The Truro Daily News, which stated in part: RECEPTIONIST/BOOKKEEPER Month Term Part-time receptionist/bookkeeper required for busy Truro company. Candidate should have at least years work experience using WorkPerfect and AccPac Accounting. Company is offering competitive salary with flexible hours (25 30 hrs) .... The plaintiff went on maternity leave after January 3rd, 1997, with the expectation that she would return in July of the same year. Ms. Penny Lee Gregory was hired by the defendant as a temporary replacement. She was hired as a part-time employee for a six month period to work 25 to 30 hours per week at a pay rate of $9.00 per hour. Ms. Gregory had graduated from St. Francis Xavier University in 1995, with an Honours Bachelor degree in Business Administration. On June 23, 1997, the plaintiff telephoned Mr. Coveyduck with respect to the timing of her return to work. At that time he informed her that he had not quite settled her position with the Company. meeting of the parties was arranged for the same day. At this meeting letter was handed to the plaintiff by Mr. Coveyduck. This letter provided in part as follows: In trying to create more effective and efficient enviornment we wanted you to be aware of some changes in our operations. These changes were well into the planning stages prior to your leaving on maternity leave. Since early January we have created new position as Accountant/Receptionist that Penny Gilbert has been performing since your departure. This position has the same responsibilities you performed in the past, however, it is now classified as permanent part-time offering flexible hours of up to 25 30 hours week with an $8 hourly rate of pay plus 4% vacation pay paid bi-weekly. These flex hours would include weeks of lesser time than at month end, depending on the workload required to close the monthly journals, etc. We hope you understand our need to change and hope you will help us continue to be more efficient. Should you accept these terms we would like to have you back on staff by July 14, 1997. If, however, you wish to think about this please notify us by June 25 as to secure our staffing needs (sic). In closing, we appreciate and value your services and trust you understand our position in this matter. After reviewing the letter the plaintiff replied that she would have to think about it. Eventually she responded with letter directed to Mr. Teasdale, dated June 30, 1997. In this letter the plaintiff stated as follows: With reference to our June 23, 1997 meeting with Ian D. Coveyduck and his instructions to contact you regarding the letter received that day, please be advised that, although am not required to do so, am prepared to discuss the proposed reduced hours. will not, and understand that do not have to accept loss of seniority (for example 4% vacation pay instead of my current 6%) or reduction in hourly rate. also require clarification of the term "permanent part time" as outlined in your letter. This was followed by letter dated July 8, 1997, wherein she stated. To confirm our July 4, 1997 telephone conversation, you stated that my job would be basically the same, but the hours, rate and vacation rate would be reduced. You stated that under Truro International Inc.'s definition of permanent part-time would not be guaranteed minimum number of hours per week, nor would be paid for statutory holidays. You also stated that the company is not prepared to pay me at my previous rate of $907.50 per bi-weekly pay period, not to provide me with vacation at the rate of 6% or three weeks per year. am prepared to return to work on July 14, 1997, but am not willing to accept reduction in wage, hours, or benefits. Please advise whether the company is prepared to have me return without these reductions in my terms of employment. It had been agreed that if the plaintiff accepted the proposed changes in the terms of her employment, she should return to work on Monday, July 14. 1997, her maternity leave having ended the previous Friday, July 11th, 1997. The plaintiff did riot return to work on July 14th, 1997. Her position was eventually filled by another person on permanent part-time basis at wage rate of $8.00 per hour for twenty-five to thirty hours per week by woman who has Bachelor of Commerce degree. The plaintiff considered that she had been constructively dismissed and commenced this proceeding for damages for wrongful dismissal. She has been actively seeking employment since the termination of her employment with the defendant. The plaintiff maintains that she had not been informed of the proposed changes in the conditions of her employment until she received the letter of June 23rd, 1997. Her counsel, Mr. Rogers, submitted that the duty is on an employer to clearly inform the employee of proposed changes in the contract of employment and here the defendant had failed to do so The plaintiff maintained, as well, that if it is found that she was constructively dismissed she should receive damages based on notice period of seven to ten months, plus vacation pay at six percent, in view of the plaintiff’s six years of employment with the defendant. In calculating the notice period Mr. Rogers says that there should be no reduction made for the months that the plaintiff was absent from employment on maternity leave. He further claimed that the plaintiff has made exemplary efforts to find employment in mitigation of her damages. On behalf of the defendant Mr. Lederman acknowledged that the changes to the terms of the plaintiff's employment were extensive. He argued, however, that the plaintiff had notice of the proposed changes in October of 1996 as result of discussions with Mr. Teasdale which took place during that month, as well as the advertisement that was published for the plaintiff’s temporary replacement. Mr. Lederman claims that it was made clear to the plaintiff at that time that the position would become permanent part-time at 25 to 30 hours per week. He also maintains that the plaintiff did not express any objection to this change at that time and thereby led the defendant to believe that she was acquiesing in the proposed change. He submitted, as well, that as early as October, 1996, the writing was on the wall that there were going to be substantial changes. He argued that but for wilful blindness on the part of the plaintiff and her failure to make inquiries, she would have seen this and could have used her maternity leave to search for new full time position. Mr. Lederman submits, on the otherhand, that if it is found that the plaintiff was constructively dismissed, the appropriate notice period that she would be entitled to would be only three to four months maximum, taking into account the fact that she was employed less than six years, since she was on maternity leave for ten months during her period of employment. The defendant acknowledges that if there was dismissal, it occurred July 14th, 1997, the date that the plaintiff refused to return to work under the new conditions. The general principles respecting constructive dismissal were considered by Gonthier, J., of the Supreme Court of Canada in Farber v. Royal Trust Co. [1997} S.C.R. 646. He said at page 858: Where an employer decides unilaterally to make substantial changes to the essential terms of an employee's contract of employment and the employee does not agree to the changes and leaves his or her job, the employee has not resigned, but has been dismissed. Since the employer has not formally dismissed the employee, this is referred to as "constructive dismissal". By unilaterally seeking to make substantial changes to the essential terms of the employment contract, the employer is ceasing to meet its obligations and is therefore terminating the contract. The employee can then treat the contract as resiliated (rescinded or terminated) for breach and can leave. In such circumstances, the employee is entitled to compensation in lieu of notice and, where appropriate, damages. And at page 859: To reach the conclusion that an employee has been constructively dismissed, the court must therefore determine whether the unilateral changes imposed by the employer substantially altered the essential terms of the employee's contract of employment. For this purpose, the judge must ask whether, at the time the offer was made, reasonable person in the same situation as the employee would have felt that the essential terms of the employment contract were being substantially changed. The fact that the employee may have been prepared to accept some of the changes is not conclusive, because there might be other reasons for the employee's willingness to accept less than what he or she was entitled to have. At pages 864 865, Gonthier, J., referred to, with apparent approval, an article by Mr. Justice Sherstobitoff. He said: In an article entitled "Constructive Dismissal", in B.D. Bruce, ed., Work, Unemployment and Justice (1994), 127, Justice N.W. Sherstobitoff of the Saskatchewan Court of Appeal defined the concept of constructive dismissal as follows at p. 129: constructive dismissal occurs when an employer makes unilateral and fundamental change to term or condition of an employment contract without providing reasonable notice of that change to the employee. Such action amounts to repudiation of the contract of employment by the employer whether or not he intended to continue the employment relationship. Therefore, the employee can treat the contract as wrongfully terminated and resign which, in turn, gives rise to an obligation on the employer's part to provide damages in lieu of reasonable notice. Although Farber was case decided under the Quebec Civil Code, as Gonthier, said at page 865, after referring to the foregoing article, "The common law rule is therefore similar to that applicable in Quebec civil law when it comes to the concept or constructive dismissal." The cases also establish that notice of changes in conditions of employment must be clear, that is, the employer must give actual notice to the employee of the proposed changes. See Holland v. Midland Walwyn Capital Inc. (1993) 124 N.S.R.(2d) at page 212 where Davison, J., said: As stated in Wrongful Dismissal by Harris (1992 Ed.), at p. 3-53: "It is, of course, an essential ingredient of constructive dismissal that the employee have actual, as opposed to constructive, knowledge of the unilateral change in job description." In my opinion, it is abundantly clear that the plaintiff was constructively dismissed by the defendant. She had been an exemplary employee over period of six years which the defendant acknowledged. She obviously was willing worker, undertaking all tasks assigned to her. During the period of her employment she merited two salary increases raising her pay rate to $12.10 per hour. She worked fixed period of 37.5 hours per week. Although her remuneration was calculated on an hourly rate, she, in fact, was guaranteed and was receiving bi-weekly salary of $907.50. In addition, her vacation entitlement had been increased from four percent to six percent of salary after she had been employed for five years, which was in accordance with Company policy. Here Mr. Teasdale testified that he discussed with the plaintiff the prospect of changing her position from permanent to part-time consisting of thirty hours of work per week. He said that it was made clear to the plaintiff that the position would become part-time as of January, 1997, which incidentally corresponded with the time that the plaintiff was to go on maternity leave. He acknowledged in cross-examination, however, that the plaintiff was "surprised obviously" when she was presented with the June 23rd. letter. Mr. Teasdale acknowledged, as well, that prior to this letter the plaintiff had not been advised of the proposed reduction in her rate of pay and vacation pay benefit. The plaintiff acknowledged that after having had the discussions with Mr. Teasdale in October of 1996, and following, she had some concerns as to whether the proposed changes in the position, that is, from full time to part-time, and the reduction in hours of work would apply to her. She maintained, however, that the defendant's intention that they would so apply was not made clear to her until the June 23rd. letter. Where there is variance in the evidence of the plaintiff arid the defence in this respect, prefer that of the plaintiff to the testimony of Mr. Teasdale. am not suggesting that Mr. Teasdale was deliberately trying to mislead the Court, but am of the view that the plaintiff's recollections of the discussions are more accurate and reliable than his. It appears to me that Mr. Teasdale put certain general propositions to the plaintiff as to the viability of the proposed changes and jumped to his own conclusions as to what the plaintiff understood or should have understood from what he was saying. It is clear from his testimony as to her reaction of surprise to the letter of June 23rd, that her understanding of the changes applying to her were not the same as his. This, however. is not the determining factor, that is, whether the employment would be changed from full time to part-time, since it was only one of the changes ultimately proposed and put to the plaintiff. Mr. Teasdale said that he told the plaintiff that the hours of work would be changed to thirty hours per week. This is not what was proposed in the June 23rd letter. It provided for period of employment "up to 25 30 hours per week”, with no guarantee of minimum number of hours per week. As well, Mr. Teasdale acknowledged that nothing was said to the plaintiff about the proposed reduction in her rate of pay vacation pay benefits and statutory holidays until the letter of June 23rd, 1997. The plaintiff said that she considered this "slap in the face". In my opinion, such proposal was indeed insulting, an insult to an employee of six years whom Mr. Teasdale acknowledged merited the "highest recommendation". Not only was she being offered pay rate that was third less than she had been previously receiving and $2.00 less than her starting pay rate, it was $1.00 per hour less than that paid to her temporary replacement. find it incredible that an employer would put such proposition to an employee of the obvious high calibre of the plaintiff with proven track record with her employer. Indeed it seems to me that only an employer displaying callous indifference to the sensibilities of the employee and lacking any appreciation for the contribution made by the employee to the employer's welfare would do so. In my opinion, only an employer blinded by the glow of air enhanced "bottom line" would make such proposal. The employer obviously had no appreciation of the plaintiff's contribution. Indeed. it appears to me as if the employer wanted to get rid of the plaintiff. The defendant put forth "take it or leave it" proposition to her and it was one that she obviously could not accept. I find, therefore, without any hesitation that these changes were fundamental to the employment contract and that the plaintiff was constructively dismissed by the defendant. I also find that the plaintiff had no notice of the proposed changes until the letter of June 23rd, 1997, which put in process events which led to the constructive dismissal as of July 14th. 1997., She was, therefore, wrongfully dismissed as of that date, there being no allegation of just case for the dismissal. The plaintiff is therefore entitled to be compensated in damages. The measure of damages in cases of this nature are usually based on determination of the appropriate notice period. The rule of thumb often applied in determining the notice period is one month for each year of employment. That rule, however, is not cast in stone, particularly where the period of employment was relatively short, that is, only few years as opposed to long term of employment. The factors that are generally taken into account in determining the appropriate period of notice are set forth in judgment of McRuer, C. J. H. C., in Bardall v. Globe and Mail, (1960) 1960 CanLII 294 (ON SC), 24 D.L.R.(2d) 140, which was referred to with approval by Iacobucci, J., of the Supreme Court of Canada in Machtinger v. Hoj Industries Limited (1992) 1992 CanLII 102 (SCC), 40 C.C.E.L. 1, 91 D.L.R.(4th) 491, [1992] S.C.R. 986. In this case Iacobucci J., said al page 998 (S.C.R.): What constitutes reasonable notice will vary with the circumstances for any particular case. Most frequently cited enumeration of factors relevant to the assessment of reasonable notice is from the judgment of McRuer, C.J.H.C., in Bardall V. Globe Mail, (supra) at p. 145: There can be no catalogue laid down as to what is reasonable notice in particular classes of cases. The reasonableness of the notice must be decided with reference to each particular case, having regard to the character of the employment, the length of the service of the servant, the age of the servant and the availability of similar employment, having regard to the experience, training and qualifications of the servant. In concurring judgment, McLachlin, J., said at page 1009, "These considerations determine the appropriate notice period on termination." Mr. Rogers referred the Court to an interesting and informative article by Michael J. O'Hara in the October, 1997, issue of the Nova Scotia Law News. In the article the author provided table of wrongful dismissal cases decided by Nova Scotia Courts in recent years and set out the notice period determined by the courts in relation to the length of service. It is interesting to note that in the case of one to 4.5 years or service the notice periods ranged from one month to fifteen months with an average of 2.51 months notice for each year of service. In the case of employment of from five to ten years, the range was from five months to twelve months for an average of 1.27 months notice per year of service. The table indicates an overall average of 1.6 months notice per year of service where the employment ranged from one to ten years. It seems to me that in this instance the dominant factor is the non-availability of employment at equivalent remuneration in the Truro area. Mr. Lederman acknowledged that the plaintiff may have difficulty in finding such and, indeed, may have to lower her sights order to obtain employment here. In my view, this supports the proposition that longer notice period than the usual is appropriate. Mr. Lederman urged the Court to take into account the ten months maternity leave that the plaintiff had taken while in the employ of the defendant in the reduction of the period of employment. This would serve to reduce the term of employment from six years to approximately five years. Mr. Lederman, however, was unable to cite any authorities in support of this proposition and candidly acknowleged that leaves of absences for other purposes probably would not be considered in determining seniority and so forth and would not result in such reduction. In this instance can see no justification for making such reduction. The plaintiff in fact, continued as an employee of the defendant even though she did not receive any pay from the defendant. It is also significant, to my mind, that the four months that she had previously spent by way of maternity leave was not deducted froth her period of employment when her vacation pay benefit was increased to six percent after five years of employment. It was also apparent that she was available by telephone for advice and assistance during her maternity leave. More important, however, is the fact that so called "maternity leave" (provided under the Employment Insurance Act, R.S.C. c. 48) is designed to provide employed mothers an opportunity to give to the new born the total care that is required in order for the child to have good start in life. Unquestionably, it is not intended as an opportunity for the employee to be seeking new employment. Although the employee is absent from the workplace, the employment continues. As the term "leave" indicates, the employee is simply absent from work with the permission of the employer, the same as in the case of vacations, albeit without pay. To my knowledge, it has never been suggested that an employee's periods of vacation should be deducted in determining the length of service. The provision for such leave is thus further implied term of the contract of employment. Accordingly, would make no reduction in the period of notice in this respect. The rule of thumb approach of one month's notice for each year of employment which in this case would yield notice period of six months, is attractive. It is very simple and makes the notice period easy to calculate. Here, however, am struck with the apparent difficulty that the plaintiff has had and will continue to have in finding employment at an equivalent rate of remuneration in the Truro area, as evidenced by her inability to date to find suitable employment despite diligent efforts on her part. This is not to suggest that the plaintiff was overpaid for the work that she was doing. Rather it seems to be due to dirth of employment opportunities in the Truro area or an over abundance of qualified people who are willing to work at very modest rate as illustrated by the case of Ms. Gilbert. She has an honours Bachelor’s degree in Business Administration and was on the Dean's List for four years while attending university, with not insignificant job experience, but was willing to take the position part-time for $9.00 per hour. As to mitigation, in my view, there is absolutely no question that the plaintiff has made continuing and diligent efforts to find employment. am satisfied that she has explored all possibilities for potential employment and has simply not been successful at any rat of pay. She has turned down no positions because she has not had the option of doing so. She simply has not been offered any positions. Considering all of the circumstances, I have concluded that an appropriate and proper period of notice is eight months. The plaintiff, therefore, is entitled to damages calculated on the basis of eight months salary at the rate she was receiving at the time of her last actual employment with the defendant plus vacation pay at six percent per annum. She is also entitled to prejudgment interest on that amount from July 14th, 1997. will hear counsel further as to the rate of prejudgment interest and costs of this proceeding. Donald M. Hall, J.
This was an action for wrongful dismissal. The plaintiff went on maternity leave for six months. During this time the defendant, her employer, hired a temporary replacement on a part-time basis, with fewer hours and less pay than the plaintiff. The defendant offered this position to the plaintiff when her leave had ended. She refused, and alleged constructive dismissal without cause. She admitted that the defendant had asked her prior to her leave if her job could be done in less hours, and that she said it might be possible. The defendant alleged that this should have made it clear to the plaintiff that her position was being changed from full-time to permanent part-time, and constituted reasonable notice. Awarding the plaintiff eight month's notice, that the proposed changes to the job fundamentally altered the employment contract without giving the plaintiff reasonable actual notice. This was therefore a constructive dismissal without cause.