20% Reduction in Compensation in Response To COVID Pandemic = Constructive Dismissal :

In Kosteckyj v Paramount Resources Ltd, 2021 ABQB 225, Justice Sidell found that a 20% reduction in the total compensation of a 6 year Engineer constituted a constructive dismissal even though it was. company wide compensation initiative because of the COVID situation and its affect on the company . This 47 year old Plaintiff was awarded 9 months notice.

Here is what the judge said :

[41] Paramount relies on Doran v Ontario Power Generation Inc, [2007] OJ No 4476, for the proposition that a compensation reduction of 14% to 17% is a not a breach that would give rise to a finding of constructive dismissal. Here the salary reduction and RRSP contribution nsuspension were collectively a 16% reduction. In addition, the 2019 Bonus Program was subject to “delay/cancelation”. In the previous two years, Ms. Kosteckyj had earned a cash bonus $1,000 and $6,267, plus restricted share units benefits (“RSUs”) which Paramount says were “worth a nominal value of $2,000 and $12,333” because at the vesting date the value was substantiallymreduced. Using her pre-April 1, 2020 salary of $154,800, the 16% reduction, together with the loss of a cash bonus of $1,000, would result in a 16.65% compensation reduction. The 16% reduction, together with the loss of a cash bonus of $6,267, would result in a total reduction of 20%. The effect of the Cost Reduction Program significantly affected Ms. Kosteckyj’s compensation in the range of 16.65% to 20%, without considering any value for the RSUs. I find that the implementation of the Cost Reduction Program resulted in the constructive dismissal of Ms. Kosteckyj.

 

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