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Constructive Dismissal Claims Not Suitable as Class Action
May 4, 2012

The Ontario Superior Court of Justice has upheld a decision dismissing a proposed class action lawsuit brought by a group of employees claiming they were constructively dismissed from their employment.

The employees, roughly 100 former agents of an insurance company, sought termination and severance pay under the Ontario Employment Standards Act after their former employer changed both its business model and the terms and conditions of employment. Despite being provided with almost 2 years “working notice” of these changes, the employees claimed their employment was effectively terminated and they were entitled to termination and severance pay as a result.

The employees sought to have their constructive dismissal claims certified as a class action.

The Court rejected the employees’ application for class certification on the basis that there was a lack of commonality between the claims. While the claims were common in the sense they were all claims for damages arising out of an alleged constructive dismissal, the Court held that the application failed to explain how the individual nature of constructive dismissal could be managed in a class action, including the questions of how each employee was affected, whether the changes constituted a fundamental breach of their individual employment contracts, and whether the offers made constituted reasonable alternate employment for the employees.

This decision confirms for employers that constructive dismissal claims are highly contextual, and will not generally be appropriate for class action proceedings.

Kafka v. Allstate Insurance Company of Canada, 2012 ONSC 1035

If you have any questions concerning the information presented in this article, please contact Paul McLean, Partner.