In Scott v. Community Living Temiskaming South, 2021 ONSC 5402 (Community Living), the court dismissed an employee’s claim for wrongful dismissal from his unionized position on the ground that it lacked jurisdiction to hear the claim, which arose under a collective agreement and had to be resolved through arbitration.  The court also dismissed the employee’s amended claim that he had been constructively dismissed when he was employed earlier in a non-unionized position on the ground that it was brought outside the two-year limitation period that governs such claims.  Notably, the court stated that the employee’s efforts to mitigate his losses arising from the alleged constructive dismissal did not toll (i.e., stop the running of) the limitation period and were irrelevant to when the limitation period began to run.

Background

The employee commenced his employment as a member of the union’s bargaining unit. He then accepted a non-bargaining unit management position offered to him on a temporary basis.  The employee held this position for two years until he was advised that the position was no longer required, and he would be returning to his previous bargaining unit position.  One month after his return to his original bargaining unit position, the position was eliminated.  When presented with three options, the employee chose to be laid off indefinitely.  Almost two years later, the employee commenced an action claiming that he had been wrongfully dismissed and sought punitive and exemplary damages in relation to the dismissal. 

The employer filed a motion for an order dismissing the wrongful dismissal action on the basis that the court lacked jurisdiction to decide such an action involving a unionized employee. The employee then filed an amended statement of claim alleging, for the first time, that he had been constructively dismissed from the non-union position when he was notified by the employer that he was being transferred back to his former bargaining unit position.  The employer argued that the employee’s claim for constructive dismissal from his management position was untimely and statute-barred by the two-year limitation period set out in the Limitations Act, 2002.

Decision  

Is the constructive dismissal claim statute barred by the two-year limitation period?

Citing precedent, the court concluded that when a constructive dismissal arises from a change of position, the limitation period starts to run from the date of the change.  Accordingly, the court held that the limitation period for the employee’s claim for constructive dismissal began to run on the day when his transfer out of his temporary managerial position back into the bargaining unit went into effect. 

The court acknowledged that in the context of a claim for constructive dismissal, the limitation period may also begin to run from the time when the employee accepts that the employment contract was repudiated by the employer.  The court noted that in his sworn evidence the employee repeatedly indicated that he considered himself to have been constructively dismissed when he was transferred back into the bargaining unit.  Furthermore, the court emphasized that by taking actions to mitigate his damages in response to the alleged constructive dismissal (i.e., by continuing to work), the employee reinforced that he accepted that his employment contract had been repudiated.

Next, the court held that the employee’s efforts to mitigate his losses arising from the alleged constructive dismissal could not toll the limitation period; such efforts were entirely irrelevant to when the limitation period began to run.

Finally, the court concluded that since the amendments to the original statement of claim to advance the employee’s claim for constructive dismissal were absent in the original statement of claim, they comprised a new and discrete cause of action brought more than two years and nine months after the facts giving rise to the constructive dismissal action were available to the employee.  As it was brought outside the two-year limitation period that governs such claims, the court dismissed the employee’s constructive dismissal claim.    

Does the court have jurisdiction to hear the employee’s wrongful dismissal claim from his unionized position?

In considering whether it had jurisdiction to hear the employee’s claim that he had been wrongfully dismissed from his unionized position, the court noted that the key consideration is the essential character of the dispute.  The court noted that Ontario’s Labour Relations Act expressly provides that when a dispute arises under a collective agreement, it must be resolved through arbitration, and this is reinforced by the province’s Rights of Labour Act.  The court held that since the terms and conditions of the employee’s employment were governed by a comprehensive collective agreement, the substance and essential character of the dispute brought the employee’s claim within the exclusive jurisdiction of an arbitrator.    

Bottom Line for Employers

Community Living verifies that when a constructive dismissal claim arises from a change of position, the limitation period begins to run from the date of the change or, alternatively, from the time when the employee accepts that the employment contract was repudiated by the employer.  The decision also confirms that efforts to mitigate losses arising from an alleged constructive dismissal cannot toll the limitation period.  Accordingly, employers faced with a constructive dismissal claim are encouraged to consider whether the claim may be statute-barred. In conducting such an analysis, employers should ignore an employee’s efforts to mitigate their damages by continuing to work, as such efforts will be deemed irrelevant to when the limitation period began to run.  Employers that conclude that a constructive dismissal claim is statute-barred by the two-year limitation period are encouraged to move to dismiss the action on that basis. 

Community Living also reinforces that if a claim arising from a dispute under a collective agreement is made against an employer in a court of law, the employer should move for its dismissal on jurisdictional grounds, as such claims must be resolved through arbitration. 

Finally, as matters relating to constructive dismissal and limitation periods may sometimes involve complicated issues of fact and law, employers are encouraged to seek advice from experienced employment law counsel regarding their individual circumstances.