In Nickles v 628810 Alberta Ltd. [Nickles], the Court of King’s Bench of Alberta (the “Court”) found that an employer constructively dismissed a longstanding employee by unilaterally revoking her decades-long remote work arrangement. The decision illustrates how significant changes to core employment terms—particularly those maintained over many years— without providing sufficient notice to an employee can constitute constructive dismissal.

Background

The employee had worked as an office manager for the employer for nearly 37 years, and there was no dispute that her position was a work from home position. During her employment, the employee primarily worked from home and occasionally visited the office as needed, largely at her own discretion. 

Following a change in ownership, the defendant employer issued a directive for the employee to work full-time in the office, and had framed this directive as a “return to office”. The employer provided the plaintiff with less than three months’ notice to comply with this directive. The plaintiff argued that she had always worked from home and asserted that the change to her work arrangement constituted constructive dismissal.

The employer proposed a compromise by offering the employee the option of working 2.5 days in the office per week, with a proviso that the employee could be required to attend the office full-time in the future. The employee rejected this offer. The employee filed a wrongful dismissal claim, arguing that she had been constructively dismissed.

Decision

The Court considered, by way of summary judgment, considered the following three issues:

1. Whether the employee was constructively dismissed;
2. If the employee was constructively dismissed, whether she had an obligation to accept the employee’s offer of working 2.5 days in-office to mitigate her damages; and
3. What the appropriate notice period would be if the employee was constructively dismissed.

Constructive Dismissal  

The Court held that the change in the plaintiff’s work location was not a simple return-to-office mandate, as commonly seen during post-COVID-19 pandemic transitions. Instead, the employer’s return-to-office mandate was found to be a fundamental change to the terms of the employee’s employment by revoking a longstanding work-from-home arrangement that was part of the employee’s role for nearly four decades. The Court emphasized that the employee was entitled to reasonable notice of this change, which she did not receive.

Mitigation

The Court dismissed the employer’s argument that the employee failed to mitigate her damages by rejecting the proposal to work 2.5 days in office instead of returning to the office on a full-time basis. The Court affirmed that the employee was not obligated to accept the employer’s conditional proposal, which was a unilateral amendment to a fundamental term of the employment contract. The Court held that if the employee were to accept this conditional proposal, it would effectively allow the employer to impose the change it sought under the guise of mitigation, notwithstanding that the proposal would still be a change to a fundamental term of employment that constitutes constructive dismissal.

Notice Period

The Court asked both parties to submit written submissions on the notice period, damages,and any other outstanding mitigation issues.

Key Takeaways for Employers

As employers continue to implement return-to-office mandates, it is important to consider the constructive dismissal risks that may arise from implementing these mandates. The Nickles decision illustrates the following important considerations with respect to return-to-office mandates:

• Remote Work May Be a Fundamental Term of Employment: When a remote work arrangement or flexible work arrangement has been a longstanding part of an employee’s employment, it may be considered a fundamental term of employment which increases the risk that a change to the work arrangement could constitute constructive dismissal. This consideration is especially important where an employee was hired during the COVID-19 pandemic when remote work arrangements were necessary, or if a longstanding employee has always been permitted to work from home.

• Provide Reasonable Notice and Clear Communication of the Change: Employers seeking to change an employee’s work arrangement should provide reasonable notice (i.e., at least 3 months’ notice) to the employee to reduce the risks of constructive dismissal. Further, employers should explain the “why”, or the reasons, for the change to the term of employment, and offer the employee with a reasonable opportunity to accept or reject the new terms.

• Alternate Employment Proposals Must Be Reasonable: If an employee rejects the change to the fundamental term(s) of their employment, employers should exercise caution if they attempt to re-offer the same position of employment to the employee. Although it is not uncommon for employers to re-offer the same position to the employee, if the terms of the position still contain the same proposed change to a fundamental term of the employee’s employment, a court will likely hold that this offer was unreasonable, and that the employee had no duty to accept the alternate offer of employment.

This blog is provided as an information service and summary of workplace legal issues.

This information is not intended as legal advice.