Taking the Managing out of a Problematic Manager

The recent Ontario Court of Appeal case of Chandran v. National Bank, 2012 ONCA 205, highlights some of the considerations an employer must make when deciding to change the fundamental aspects of an employee's job – even when those changes are demonstrably required.  The failure to properly follow the correct procedures can result in an employee's successful claim for constructive dismissal.

Facts

Plaintiff employee, Chandran, was employed by the bank for 18 years.  He was promoted several times and by August 2007 he was a senior manager, which included the responsibility of supervising 11 employees.  In August 2007, the bank conducted a survey of the employees in Chandran’s office.  Nine of the eleven employees complained about Chandran, saying that he made condescending remarks, embarrassed employees in front of others, and engaged in bullying behaviour.  After a meeting with Chandran to discuss the employee complaints, the bank sent him a disciplinary letter setting out the behaviour that provoked the complaints, informing him that he would be relieved of his supervisory duties, and providing him with two possible reassignment options (same salary and level, but without supervisory responsibilities).  Chandran did not accept either offer.  He left the bank and after 14 months found employment with another bank.

Trial Decision

Chandran brought an action against the bank for wrongful dismissal.  The trial judge found that Chandran was constructively dismissed and that he was not required to mitigate his damages by accepting one of the positions offered by the bank.  The trial judge fixed the notice period at 14 months and awarded damages of $131,226.59.  The bank did not challenge the finding of constructive dismissal on appeal.

Court of Appeal for Ontario

On appeal the bank took the position that the trial judge erred by concluding that Chandran was not required to mitigate his damages by accepting one of the positions offered by the bank.  The Court of Appeal disagreed.

As the Court of Appeal noted, the trial judge concluded that, viewed objectively, Chandran would have been subjected to, “an atmosphere of embarrassment or humiliation” (see Evans v. Teamsters, 2008 SCC 20) as well as a real fragility in his continuing employment with the bank.  Accordingly, the Court of Appeal concluded that it simply could not be said that the trial judge’s ultimate conclusion that Chandran “did not therefore have a positive duty to accept the offers” amounted to a palpable and overriding error.

Analysis

This case demonstrates the difficulty employers will face when confronted with a situation that requires action.

Clearly, in the face of complaints from nine of the eleven employees that Mr. Chandran supervised the bank had a duty to act; lest the bank face suits from eleven people and not just one.

What should the bank have done?

The answer would appear to lie in the analysis of constructive dismissal.

The bank must have considered itself as having no option but to remove Mr. Chandran from a supervisory position.  Such a change has long been recognized as a fundamental change to an employee’s contract, the result of which is that the employee has the option to claim constructive dismissal.

Knowing this outcome, the bank’s more tactical move should have been to terminate Mr. Chandran’s employment as a senior manager - on appropriate notice - and then offered him the alternative positions within the bank.  Had proper notice been provided, the bank may have removed the possibility of a suit and its related costs.

The case demonstrates that even if an employer has legitimate reasons for removing someone from a supervisory position, those changes cannot be made without some consideration of the employee’s rights – no matter how challenging an employee the individual is.

As always, everyone’s situation is different.  The above is not intended to be legal advice for any particular situation and it is always prudent to seek professional legal advice before taking any decisions on one’s own case.

Sean Bawden is an Ottawa, Ontario employment lawyer and wrongful dismissal lawyer. He tweets from @SeanBawden.