If followed, a recent Ontario case could result in the elimination of many specific penalty clauses in employment contracts. A specific penalty clause states that if an employee engages in a specific behaviour then the employee agrees s/he can be terminated for just cause without any notice or termination pay in lieu of this notice.
Many employers assume that they can demote an employee as a disciplinary measure and are shocked to learn that doing so might constitute a constructive dismissal. In fact, it will be a constructive dismissal in most cases.
In Hussey v Bell Mobility ( 2022 FCA 95) Justice Pelletier was reviewing the decision of a Unjust Dismissal Adjudicator who, having found that the employee was unjustly dismissed, refused to reinstate her as he was not satisfied that given the employee’s past actions and her lack of remorse and self reflection, that there existed the grounds for a viable continuing employment relationship.