HRANB Newsletter

In this edition of The Bench, you’ll be asked to determine the outcome to a rather unusual situation – where an employee sues their employer for breach of contract, but wants to remain an employee.

Here are the facts

Thomas Anstey was employed by Fednav Offshore Inc. (“Fednav”) as a Master of a ship. Originally, he worked such that for every 30 days at sea, he received 30 days paid leave (effectively working 6 months a year with 6 months paid leave), along with other benefits such as matching pension contributions, vacation pay, and bonuses.

Six years after Mr. Anstey was hired, the employer reorganized its operations and implemented cost-cutting measures. As a result, Mr. Anstey’s benefits, as well as all other employees’ benefits, were reduced so that instead of working 30 days on, 30 days off, with all 60 days paid, he would work 30 days on, have 60 days off, and only receive pay for 15 of the 60 days leave. Effectively, this meant that Mr. Anstey would work 4 months in a year, receive pay for 2 months off, and the other 6 months leave would be unpaid. This also reduced the contributions to his pension plan, vacation pay, and statutory holiday benefits.

Mr. Anstey filed a complaint with the Canadian Human Rights Commission when the changes were implemented, alleging discrimination on the basis of age. Eighteen months later, the complaint was dismissed. Mr. Anstey subsequently hired a lawyer, who sent the employer a letter raising concerns about the loss of earnings from the changes, and requesting settlement, failing which Mr. Anstey would commence legal action. The employer responded that if any legal action was started, Mr. Anstey would be fired.

Legal action was commenced by Mr. Anstey for breach of contract. Mr. Anstey continued to work without any complaint from the employer. Settlement was attempted, but failed. The employer then fired Mr. Anstey, on the basis that commencing legal action was inconsistent with the requirements of “utmost loyalty, good faith and trust” required of senior employees like a ship’s Master. At the time of dismissal, he had eight years of service. Mr. Anstey then sued for wrongful dismissal in addition to the breach of contract claim already filed.

The breach of contract claim was dismissed by the Court on the basis that the change to his contract would have entitled Mr. Anstey to sue for constructive dismissal at the time, but Mr. Anstey had condoned the change by remaining an employee for approximately two years after the change was made. The remaining issue was whether the employer had just cause to dismiss the employee for suing them.

What is your ruling from the Bench? Was Mr. Anstey wrongfully dismissed?

If you ruled that Mr. Anstey was wrongfully dismissed by Fednav, you are right. The Court recognized that in most cases, bringing a lawsuit would negatively affect the employment relationship. Furthermore, the Court noted that in some circumstances, a lawsuit indicates there are other elements that could support just cause. Nevertheless, the Court found that bringing a lawsuit, by itself, did not constitute cause for dismissal, and that in Mr. Anstey’s case, there was nothing else to support just cause. Mr. Anstey was not dishonest, insubordinate, or otherwise negligent in his conduct and performed his duties without complaint from Fednav.

Considering Mr. Anstey’s senior position, advanced age, and eight years of employment, he was awarded eight months salary in lieu of reasonable notice.

This case illustrates the importance of understanding the concept of “just cause” and how to manage changes to an employee’s contract of employment. Whenever an employer makes fundamental changes to an employee’s contract of employment, particularly a high level or senior employee, there is a risk of a lawsuit for breach of contract or constructive dismissal. The risk of a lawsuit can be minimized through reasonable notice of the change and other techniques. If an employee brings a lawsuit after a fundamental change, without quitting, it is important to look at all the facts, beyond the filing of the lawsuit itself, to determine whether just cause exists.

Next newsletter, we’ll take a look at another example of an employee suing their employer and being dismissed, but with a different set of facts, and see what you would do then.

For more information see: Anstey v. Fednav Offshore Inc., [1990] F.C.J. No. 477 (T.D.).

Moira Goodfellow and Ryan Johnston are members of McInnes Cooper’s Regional Labour and Employment Law Practice Group.

For more information, or to contact Moira, Ryan, or any member of McInnes Cooper, please visit www.mcinnescooper.com