Negotiation can be best option in a constructive dismissal

By Tony Poland, LegalMatters Staff • The uncertainty of a constructive dismissal claim makes it a risky proposition so a negotiated settlement is often the more prudent choice, says Toronto-area employment lawyer and mediator Stuart Rudner.

“Most of these cases are all or nothing, which means that if you are an individual pursuing the claim you may succeed but you also have a very real risk that you will fail and not only get nothing but you could be ordered to pay your employer’s legal costs,” says Rudner, founder and principal at Rudner Law. “The same is true as an employer. You may succeed in proving the actions you took were justified. However, if you don’t, you may be on the hook for substantial damages and set a precedent and face the prospect of paying damages to others as well. That is why it makes sense to attempt to settle these cases.”

He says proving what constitutes constructive dismissal can be challenging. Employers have the right to make changes to their organization to ensure their success. However, those rights are not unlimited, Rudner explains.

‘Risk is a great motivator’

“Risk is a great motivator, and the reality is that many of the cases I am meditating now are quite risky because we don’t have clear jurisprudence on the issues,” he says. “Is it a constructive dismissal to insist that an employee be vaccinated, or to put them on unpaid leave if they won’t wear a mask? 

“There are so many open questions, and most individuals and organizations don’t want to roll the dice in litigation. They might end up with nothing, paying their legal fees and a portion of the other side’s legal fees. And for a company that may have treated dozens of other employees the same way, a loss could trigger many more claims.”

Constructive dismissal involves “a unilateral and substantial change to a fundamental term of the employment relationship,” he says. 

However, not all unilateral changes amount to constructive dismissal and there are no absolute rules defining what can be considered substantial, Rudner says.

“The reality is every case is fact specific,” he tells LegalMattersCanada.ca. “When we have a client claiming constructive dismissal as an employee, we advise them that unlike a wrongful dismissal claim, where the only issue is how much compensation they are entitled to, if they are alleging constructive dismissal, they must prove they were actually constructively dismissed first. If they cannot prove that, then they have no entitlement at all.

“There is a whole other level of uncertainty in any constructive dismissal claim,” Rudner adds. “It may depend on what judge hears your case because, as we have often seen, different judges can look at similar facts and interpret them differently.” 

Can set a risky precedent

For employers, the chance of setting a risky precedent exists, he says, using the example of COVID safety policies.

“Usually, we are not talking about one person being suspended for refusing to be vaccinated or wearing a mask. We’re talking about dozens, if not hundreds,” Rudner says. “Losing a constructive dismissal claim can result in paying damages to many people.

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“Constructive dismissal claims are risky in normal times. The reality is that many of the claims we are seeing arise out of COVID. This is all new and unprecedented. Predicting an outcome in these cases is more difficult than typical constructive dismissal claims but one case within a company can impact many other employees.”

He says finding a way to negotiate an agreement can make more sense than going to court. 

“I never encourage someone to settle unless it makes sense for them,” says Rudner. “I have a significant amount of experience dealing with constructive dismissal claims in mediation. The good news is that the vast majority of them are being settled. I have always taken a lot of pride in the fact that almost every case that I mediate comes to a settlement. That has been true even in the context of these COVID-related constructive dismissal claims.” 

Always put personal feelings aside

As a lawyer and as a mediator, Rudner says he puts his personal feelings and views aside, “because those are not relevant.” 

“When you are in mediation, you are assessing a potential resolution, you are trying to weigh your odds of success,” he says, “With some of the more novel or unprecedented claims, it is difficult to do that. It can be a struggle to determine how much risk is involved in pursuing a claim, or defending one.” 

Going to trial takes more time, is more expensive and can be extremely stressful, says Rudner.

“It is not just about the time expenditure and the resources being used but also the uncertainty,” he says. “What I often tell clients is, ‘We can settle now and at least you will know what you are going to be getting or what you are going to be paying, or you can continue on through the litigation process, which might be another year or two or more, and you will have no idea what’s going to happen.’

Litigation can cause anxiety, stress

“Many people are not really equipped to go through the litigation process because of the anxiety and stress,” he adds.  “Not only that, if you lose at court, you could end up paying not only your legal costs, but a portion of the winning side’s costs.”

Rudner says people are more accepting of mediation and go into it recognizing “it is better to get something than to risk getting nothing.”

“As a mediator, it is always rewarding to see the anxiety and the stress leave the faces of the parties when they realize their case has been resolved,” he says. “That is probably even more true in the context of some of these constructive dismissal claims. 

“Both sides may have begun this process worried that there is a very real risk that they can be facing a significant loss. But that changes if they can negotiate a settlement. I am quite happy that I have been able to settle the vast majority of these cases.

This is Part 2 of a series. To read Part 1, click here.