In Cressey Construction Corporation v. Parolin, 2026 BCCA 199, the BC Court of Appeal considered whether an employer unilaterally ending a longstanding flexible work arrangement constituted a constructive dismissal.
Background
Tracy Parolin began working at Cressey Construction Corporation (“Cressy”) in 2005 and was promoted to Director of Marketing in 2018. Ms. Parolin’s terms of employment were primarily oral, with the exception of a job description.
Between 2013-2023, Ms. Parolin worked reduced and flexible hours with permission from Cressey’s Executive Vice President, Mr. Lammam. Ms. Parolin began working from home at the start of the COVID-19 pandemic. Despite all other Cressy employees returning to work in the office in June 2020, Ms. Parolin was permitted by Cressey’s Vice President of Development, Mr. Turcotte, to continue working remotely. In 2021, Mr. Turcotte left Cressey and Ms. Parolin confirmed with Mr. Lammam that she could continue working remotely. Mr. Lammam agreed and helped Ms. Parolin set up her home office. In March 2023, Ms. Parolin returned to full-time hours while continuing to work from home with a flexible schedule.
In May 2023, Ms. Parolin met with Cressey’s new Vice President of Development, Mr. Kendall, to discuss a pay increase that she had been seeking since her 2018 promotion. Mr. Kendall advised Ms. Parolin that she would receive a small salary increase, which was well below her expectations. He justified the amount on the basis that Ms. Parolin’s role was comparable to a Marketing Manager, rather than her actual position as a Director of Marketing. Ms. Parolin was also directed to return to work in the office full-time.
Based on the meeting with Mr. Kendall, Ms. Parolin concluded that she had been constructively dismissed.
Trial Decision
The trial judge concluded that Ms. Parolin’s flexible work hours and work location were oral terms of her employment contract. The trial judge found that the combined effect of the direction to return to work in office, without notice, the offer of such a small salary increase, and the reference to Ms. Parolin’s position being more comparable to a Marketing Manager effectively established a demotion. The trial judge found that the demotion and the unilateral change in essential terms of the employment contract established a constructive dismissal.
Court of Appeal Decision
The Court of Appeal upheld the trial decision and dismissed the appeal. The Court found that the employment contract contained an express oral term permitting Ms. Parolin to work from home which was an essential term of the employment contract. Cressey’s direction to return to work in office without notice was a unilateral breach of this essential term.
The Court upheld the trial judge’s conclusion that a reasonable person in Ms. Parolin’s circumstances would have seen this breach as a substantial change, constituting a constructive dismissal. The Court noted that it was therefore unnecessary to consider Cressey’s argument that the trial judge erred in finding that Ms. Parolin was demoted. Cressy did not actually challenge the trial judge’s findings that working from home was an essential term of Ms. Parolin’s employment.
Takeaways
The legal principles underlying this decision are well-established. Employers cannot unilaterally change the essential terms of the employment contract without exposing constructive dismissal risk. This is nothing new. Even though the whole concept of remote work is grounded in flexibility, this decision highlights how less formal arrangements regarding remote work can create binding contractual obligations in some cases.
This decision presents an opportunity to consider how employers can mitigate against constructive dismissal risks arising from remote work arrangements in future matters. Although oral contracts are equally binding, written employment contracts offer much greater certainty and clarity of terms. Written contracts present the opportunity to include express terms which could, among other things, preserve the employer’s right to make reasonable changes and direct the location of work, or otherwise stipulate how remote work arrangements could be reasonably changed in the future in a manner that is consistent with the contract, rather than in breach of an essential term.
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