Can the Revocation of a Work Vehicle Amount to Constructive Dismissal?

Written on behalf of Peter McSherry

As an employee, having access to a reliable vehicle through their employer for work-related purposes can be a great benefit, particularly if the job requires extensive travel or requires a bigger vehicle. However, there may come a time when an employer is no longer willing to provide a work vehicle to an employee. Can this be considered a significant enough change in terms of the employment agreement to amount to constructive dismissal? The Ontario Superior Court of Justice recently provided guidance on this issue in the recent decision of Quesnelle v. Camus Hydronics Ltd. 

Employer’s offer of company vehicle not referenced in the employment agreement

The employee had been working with the defendant employer as both a gas filter specialist, and heating, ventilation and air conditioning (HVAC) technician since 2014. The employee had worked for a competitor from 1992-2014 and left to work with the employer following their recruitment efforts. 

One of the terms the employee negotiated for himself was the employer’s promise of a vehicle which would be fully paid for and maintained by the employer, including operating costs, insurance, and highway tolls. The employee stated this term was essential for him because of the distance between his home in Oshawa and the employer’s office located in Mississauga. 

The employee signed an offer for the role of “Sales and Service Support” in March 2014, however, the offer did not reference the parties’ agreement about the vehicle, despite it forming a part of his compensation. The employer did, however, provide the employee with a Dode Ram and paid for the associated operating costs for seven years, including costs associated with the employee’s personal use of the vehicle. 

Employer tells employee that his truck will not be replaced

In 2021, the employee approached the employer seeking a company vehicle replacement as it had been driven over 409,000 kilometres and was no longer suitable for the road. The parties communicated over email until March 2021, when the employee’s manager advised him that the employer would not be replacing the truck. 

The employee asked if the employer would cover costs of restoration and insurance if he were to purchase a truck himself, and asked if he would be required to return his gas card and transponder for the 407 toll highway. The employer told the employee that the company would cover these costs for one month, after which point the employee would become solely responsible for all vehicle expenses.

The employee expressed his concern to the employer that the change in policy amounted to a significant pay cut, with the cost of a new truck being about $55,000, and annual operating expenses expected to cost $32,000. The employer offered the employee the option to purchase the truck he had been using for fair market value.

Employee resigns from job citing constructive dismissal

In April 2021, the employee, through his lawyer, communicated with the employer stating that the employer’s refusal to pay for a new vehicle and associated maintenance costs amounted to a reduction in his compensation equal to more than 30%. The employee claimed that this matter amounted to constructive dismissal and he resigned two weeks later. 

Following his resignation, the employee sold one of the two homes he owned with his partner. His new home was further away from the employer than his old one. The employee commenced an action against the employer on June 1, 2021, after which the employer filed a Notice of Intention to Defend. However, shortly thereafter, the employer offered the employee his job back as well as the use of a fully paid vehicle for one year. The employee declined this offer, citing his further distance from the employer’s office, as well as his treatment leading up to his resignation. 

Court finds change to essential terms of employment

In asking whether the employee was subject to constructive dismissal, the Court referred to guidance provided by the Supreme Court of Canada in the 2015 decision of Potter v. New Brunswick Legal Aid Services Commission, which stated that:

“When an employer’s conduct evinces an intention no longer to be bound by the employment contract, the employee has the choice of either accepting that conduct or changes made by the employer, or treating the conduct or changes as a repudiation of the contract by the employer and suing for wrongful dismissal…. The burden rests on the employee to establish that he or she has been constructively dismissed. If the employee is successful, he or she is then entitled to damages in lieu of reasonable notice of termination.”

In the case at hand, the Court found that despite the employment contract being silent on the matter of a company vehicle, the evidence showed that this formed a critical part of the employee’s negotiated compensation, and as such, was a term of his employment. The Court was satisfied that the employer’s decision to no longer offer the employee a vehicle amounted to a significant change in his benefits package, with the vehicle and costs worth more than $30,000 per year. 

Employee entitled to damages

While the Court was sypmathetic to the employer’s business needs, noting that the employee in question was the only one who enjoyed the benefit of a company vehicle, and that his job had evolved over the years which reduced the required work related travel, Justice Charney ultimately held that the refusal to replace the employee’s company vehicle was significant enough to be considered a change in essential terms of the employment agreement. The Court found that the employer’s unilateral cessation of the company vehicle changed an essential term of the employee’s employment contract and constituted constructive dismissal. The employee was awarded damages in the amount of $56,025.

Peter A. McSherry can help you if you’re a victim of constructive dismissal

At Peter A. McSherry Employment Lawyer, our employment law team provides clients with a full assessment of their case and assists in guiding them through their options at each stage of the process. We assist employees working through difficult employment law situations, such as constructive dismissal and severance packages. If you believe your employment has been terminated due to constructive dismissal, it is important to consult with an experienced employment lawyer. Contact our office today at 519-821-5465 or reach out to us online to schedule a confidential consultation.