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Posted on March 1st 2009 in Employment Law

When the Boss is a Bully

When you think of bullying the picture that probably pops up is a big mean kid pushing all the other kids around. But if you think this kind of intimidation happens only in the school yard you would be wrong. In recent years, bullying has been making its presence felt in the workplace. When the bullying becomes serious enough it may lead an employee to quit a job and sue the employer for constructive dismissal.

Constructive Dismissal
As we explained in the Spring Legal Issues, constructive dismissal traditionally occurs when the employer unilaterally alters an essential term of the employment contract, whether written or implied. In such cases, the employee may treat the employment as terminated. These changes generally include a reduction in salary and/or responsibilities or a change in work conditions.

In 1998, the courts expanded the definition of constructive dismissal. They concluded that an employee did not have to point to a particular fundamental term having been breached if the employee’s situation established that the employer had renounced the entire relationship without cause. The leading case in Ontario is Shah v. Xerox Canada Ltd.

The Facts
Shah worked for Xerox for more than 12 years. During that time he had only positive performance reviews. In addition, he received regular pay raises and bonuses. Based on his technical credentials and his initiative, Shah was recommended for a new technical support analyst’s position. A few months after accepting the position, Shah’s group was moved to Harvey’s division. Confusion soon developed about the division of labour and about whom Shah was to report to. Shah was also criticized by Harvey for spending too much time away from the home office despite Harvey being responsible for Shah’s involvement in the exchange program.

Four months passed with no further criticism. However, at Shah’s next performance review Harvey raised several concerns which Shah addressed. The review was followed up with a warning letter which suggested that Shah’s position was in jeopardy. Harvey became more authoritarian, impatient and intolerant with Shah. About this same time, Shah’s wife suffered her fifth miscarriage and Shah himself became ill. At no time did Harvey inquire about Shah’s personal situation, and he turned down Shah’s request for a six-week unpaid leave of absence.

Two months after the first letter, Harvey sent Shah a second unexplained warning letter. Shah was then put on one month’s probation. Believing that his days at Xerox were numbered, Shah tendered his resignation.

Resignation or
Constructive Dismissal
Shah subsequently sued for damages claiming that his work situation had become unbearable and that he had been left with no choice but to resign.

A careful review of the evidence convinced the court that Shah’s position as a member of Harvey’s group had indeed become intolerable and that he had been constructively dismissed without cause. The court found that the situation was primarily the result of Harvey’s inefficient and unreasonable conduct.

Although a finding of constructive dismissal generally requires a change of a fundamental term of the employment contract, the judge in the Shah case indicated that such a finding is not necessary. Instead, the test to be met is whether the conduct of the manager/employer is such that a reasonable person in the circumstances should not be expected to persevere in the employment.

Xerox unsuccessfully appealed. In upholding the lower court’s decision, including the broader definition of constructive dismissal, the Ontario Court of Appeal stated, “In some cases, however, the employer’s conduct amounts not just to a change in a specific term of the employment contract but to repudiation of the entire employment relationship.”

Saunders v. Chateau Des Charmes Wines
Saunders v. Chateau Des Charmes Wines is another case where the employee was found to have been constructively dismissed based on how he was treated by his supervisor. Saunders began his career as a sales manager before being promoted to director of marketing. The relationship between him and his boss was positive and productive during the first nine years.

Although there were several unpleasant exchanges between Saunders and his supervisor during the final year, it was the treatment during the last two weeks that “was of sufficient severity and effect to amount to a repudiation of the employment relationship.” Saunders’ supervisor had begun to display an unrelenting and escalating anger. His behaviour was hostile, aggressive, profane, rude, demeaning and intimidating.

With respect to the short period of bullying, the court specifically stated that “It matters not that it was over a period of only about two weeks.”

Advice for Employers and Employees
So where does this leave employers and employees? Are employers entitled to be critical of the unsatisfactory work of its employees? Are employers entitled to take measures to remedy the situation? And what about employees who take everything personally? Will every harsh word support a case for constructive dismissal?

In order to protect itself against a claim for constructive dismissal, an employer must ensure that its employees are treated with civility, decency, respect and dignity. Therefore, employers should guard against the following types of behaviours and actions.
o Making rude, degrading or offensive remarks.
o Discrediting an employee by spreading rumours.
o Intimidating an employee.
o Isolating an employee.

Another important note to employers is that it is not up to the vulnerable employee to advise the employer that a particular type of conduct is not acceptable. Rather the employer bears the onus of identifying problems in the workplace and taking appropriate steps. The employer is also obliged to conduct an investigation to determine what has actually happened, as the rights of the alleged harasser must also be protected.

If you are an employee and you are being subjected to a pattern of unacceptable behaviour you would be wise to keep a journal of the events and to seek legal advice. It is important that you determine whether you are the target of a bully or you are simply being subjected to strong management or justifiable criticism. If you resign and a court does not agree with your assessment of the situation you will be without a job and your claim for constructive dismissal will be lost.
Whether an employer or an employee, if you need more information about employment law generally, and constructive dismissal in particular, please contact Howard Steinberg.