Suspensions Should be with Pay

Date: 2006
Author: Daniel A. Lublin
Publication: Metro

The workplace can occasionally resemble the banquet of Damacles with the sword ever suspended, as reference by Voltaire over 200 years ago. – The Honourable Justice R.S. Echlin in Carscallen v. FRI Corp.

FRI Corp wanted to teach marketing executive Christina Carscallen a lesson. But as FRI Corp learned, some lessons come with a very steep price.

Angered by a botched trade show and a heated email exchange with her boss, FRI Corp chose to suspend Carscallen without pay. However, FRI Corp didn’t stop there. Carscallen was demoted, her flex hours withdrawn and just to rub a little salt in the wound, she was told she would have to share a cubicle with a subordinate.

Demoted, suspended without pay and seriously dejected, Carscallen decided to exit the workplace rather than accept the punishment levied against her. FRI Corp sent her voice mails, emails and letters threatening that by failing to return to work, she would be viewed as abandoning her job, or she would be dismissed for just cause. Carscallen didn’t return. Instead, she sued for constructive dismissal, arguing that by suspending her without pay, FRI Corp had effectively terminated her employment. The Court agreed with Carscallen and ultimately it was FRI Corp who was taught a lesson: Carscallen was awarded one year’s salary as compensation.

In light of this case, when it comes to suspending an employee for disciplinary purposes, the messages to both employees and employers are clear:

Employers can suspend employees for disciplinary purposes, but it should only be done for a defined period of time and on a paid basis. Unpaid suspensions may be viewed as a constructive dismissal and similar to Carscallen, the suspended employee may be entitled to damages as if he or she was fired.

If the employment contract or relationship allows employees to be suspended without pay, then it is likely an appropriate form of discipline when used correctly.

If the employee has committed a serious wrong that would otherwise be grounds to be dismissed for just cause, then a suspension without pay can be an acceptable form of punishment instead.

Absent just cause for termination, it is always open for an employer to just dismiss an employee who is no longer welcome. However, in this case, the employee must receive advanced notice of the termination or a severance payment. For example, had FRI Corp simply paid Carscallen a severance package, its actions would have been lawful.

A court will frown upon an employer who doesn’t follow its own policy manual or workplace rules when disciplining an employee. In Carscallen’s case, FRI had a policy for fair discipline that it chose to ignore.

Although it occurs infrequently, if an employee is given an opportunity to fairly challenge the discipline against him or her, a suspension without pay may be suitable.

Ultimately, being suspended without pay, demoted or reassigned to a lesser position may be inappropriate workplace conduct. The test is complex and an employment law expert should always be consulted.