May 5, 2025 from HRD Canada
Recent Canadian rulings have underscored the risks employers face when disciplining workers without explicit contractual authority. In Putter v. Joey Tomato’s (Canada) Inc., the B.C. Civil Resolution Tribunal (CRT) ruled that a one-week unpaid suspension amounted to constructive dismissal — and awarded damages, including a $2,000 punitive penalty. This builds on the precedent set by the Supreme Court of Canada in Potter v. New Brunswick Legal Aid Services Commission.
Both decisions send a clear message: without precise language in contracts or policies, even short suspensions — paid or unpaid — can be treated as significant breaches of contract.
Why suspension matters in constructive dismissal cases
In Putter, the CRT found that an unpaid suspension violated the employee’s right to work and be paid, even though her contract stated she wasn’t guaranteed hours. The tribunal determined that Joey Tomato’s lacked a clear policy authorizing unpaid suspensions and failed to explain why such a step was necessary.
Employment lawyer Jenson Leung of KSW Lawyers explains that courts and tribunals will closely scrutinize whether employers had the implied or express right to impose such discipline. Without clear documentation, a suspension — particularly one without pay — may be considered a repudiation of the employment contract.
As Leung puts it:
“Without a contract or policies that explicitly allow for suspension on a temporary basis as a disciplinary measure, it’s going to be pretty dicey to put someone on an unpaid suspension.”
Potter: The foundational framework
Potter, decided by the Supreme Court in 2015, involved a paid administrative suspension without clear contractual justification. The Court established a two-part test for constructive dismissal:
- Did the employer breach an express or implied term of the employment contract?
- Was the breach substantial enough to constitute a fundamental change?
Even a paid suspension, the Court held, could qualify as constructive dismissal if the employer failed to act with good faith and transparency. The ruling cautioned against relying on vague handbook language or implied powers when imposing disciplinary action.
Contracts, casual status, and stable hours
Employers often use “no guaranteed hours” language in casual contracts to maintain flexibility. But, as the CRT emphasized in Putter, written terms may not shield employers if, in practice, the employee works regular and predictable shifts.
Leung notes that “even if someone has a contract that says they’re not guaranteed any hours,” if they consistently work similar hours, suspending them without pay may still amount to constructive dismissal. The key is the reasonable expectation created by the pattern of employment — not just what’s on paper.
Recommendations for employers and HR
To reduce the risk of constructive dismissal claims, employers should:
- Include clear suspension clauses in contracts and policies, defining the scope and time limit of suspensions
- Document disciplinary decisions with rationale, allow employee responses, and offer appeal procedures
- Review roles labeled “casual” for implied patterns of regular work and update contracts if needed
- Seek legal advice before imposing unpaid suspensions or novel disciplinary measures
Leung emphasizes, stating
“Having a contract that’s drafted a certain way can help minimize the chances of it not working when you need it to. But it also comes down to how the employer behaves — it’s about good faith.”
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