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Constructive Dismissal: Limitation Period Begins to Run From Date Changes Announced

Posted On: January, 21 2015

In a recent Divisional Court decision, the Court had the opportunity to comment on limitation periods in constructive dismissal matters.  This decision concerned a class certification motion brought by employees of Allstate Insurance Company.  The representative plaintiffs alleged that they, along with other class members, had been constructively dismissed by Allstate’s new business plan.

Kafka v. Allstate Insurance Co. of Canada, [2012] O.J. No. 1520, 2012 ONSC 1035

In 2007, the Defendant Employer announced that it would be implementing significant changes to its business model.  Allstate had previously employed its agents through Neighbourhood Agency Offices (“NOAs”) which were essentially like small franchises.  Under the new model, Allstate would be closing and consolidating its NOAs into larger regional offices.  The formerly independent agents would now be working together inside a larger office.

The Plaintiffs argued that this amounted to a constructive dismissal because it fundamentally changed the terms of their employment with Allstate.  As part of its defence Allstate argued that the Plaintiffs were out of time because the changes had been announced in 2007, and the suit was commenced more than 2 years after the changes were announced.

The Plaintiff responded that the limitation period ought to begin running from the date that the changes were implemented, not from the date that the changes were announced.

Allstate’s position was that the announcement was the relevant date because it included a 2-year notice period during which the Plaintiffs could have registered objections to the plan.

The Court decided against the Plaintiffs on the limitation issue, and this decision could have important implications for constructive dismissal cases generally.  The Court ruled that where, as in this case, it is clear that the employer intends to implement the change, then the notice period begins running from the date the change is announced.

The lesson here for potential plaintiffs is that if your employer is proposing significant changes to your job duties, compensation, working conditions, or other conditions of employment, do not wait for those changes to be implemented before seeking legal advice.

 

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