When does a tyrannical boss become a legal liability?

After a recent Toronto Star art­icle out­lined com­plaints regard­ing Prime Min­is­ter Mark Car­ney’s man­age­ment style and about a dif­fi­cult work­ing envir­on­ment within the Prime Min­is­ter’s Office (PMO), Cana­dians may reas­on­ably have wondered: when does a demand­ing boss become a legal liab­il­ity?

The answer might sur­prise many employ­ees and employ­ers.

As employ­ment law­yers, we routinely advise exec­ut­ives, man­agers and employ­ees oper­at­ing in extraordin­ar­ily high-pres­sure envir­on­ments. Whether a Bay Street trad­ing floor, a cor­por­ate board­room, a major law firm or the Prime Min­is­ter’s Office (PMO), one mis­con­cep­tion appears again and again: that being sub­jec­ted to a tyr­an­nical boss is, by itself, unlaw­ful. It is not.

Cana­dian employ­ment law gives employ­ers remark­ably broad author­ity to man­age their work­force. A man­ager may be demand­ing, impa­tient, abras­ive, blunt, dif­fi­cult to please and even unpleas­ant. None of that is inher­ently illegal.

Courts have repeatedly con­firmed that employ­ees are not entitled to a stress-free work­place. Not even close. Employ­ers are per­mit­ted to set ambi­tious tar­gets, impose strict account­ab­il­ity stand­ards, demand long hours (sub­ject to employ­ment stand­ards, max­imum num­ber of hours of work) and insist upon excep­tional per­form­ance. Some of the most suc­cess­ful organ­iz­a­tions in the coun­try are built upon pre­cisely those expect­a­tions.

A dif­fi­cult boss may be bad for mor­ale. It may lead to turnover. It may even be poor lead­er­ship.

But it does not auto­mat­ic­ally lead to a law­suit.

If an employee resigns solely because a super­visor is hard to sat­isfy, main­tains exact­ing stand­ards or routinely dis­cip­lines them for poor per­form­ance, that depar­ture will gen­er­ally be treated as a vol­un­tary resig­na­tion, leav­ing the employee with no enti­tle­ment to sev­er­ance, dam­ages or com­pens­a­tion.

The law changes when man­age­ment crosses the line from demand­ing per­form­ance to attack­ing the indi­vidual.

An employer’s right to man­age is not a licence to humi­li­ate or tor­ment.

Con­struct­ive dis­missal can arise when man­agers routinely berate employ­ees, scream at them, pub­licly embar­rass them or engage in a pat­tern of degrad­ing con­duct. In those cir­cum­stances, the issue is no longer per­form­ance man­age­ment. It becomes a fun­da­mental breach of the rela­tion­ship itself.

Every employ­ment con­tract con­tains an implied legal oblig­a­tion that employ­ees will be treated with civil­ity, dig­nity and respect. When man­age­ment con­duct des­troys that found­a­tion, an employee may be entitled to resign and claim dam­ages as though they had been ter­min­ated.

The fin­an­cial con­sequences can be sig­ni­fic­ant.

For senior employ­ees, con­struct­ive dis­missal awards fre­quently reach hun­dreds of thou­sands of dol­lars. For exec­ut­ives, they can be sub­stan­tially higher.

The risks do not stop there. Across Canada, employ­ers are also sub­ject to stat­utory oblig­a­tions to provide work­places free from har­ass­ment and viol­ence. Occu­pa­tional health and safety legis­la­tion, human rights legis­la­tion and work­place har­ass­ment rules impose legal duties that extend bey­ond tra­di­tional wrong­ful dis­missal prin­ciples.

Codes of con­duct provide addi­tional con­trac­tual oblig­a­tions, some of which many employ­ers impose upon them­selves by bor­row­ing codes from other com­pan­ies without con­sid­er­ing whether they “walk” that par­tic­u­lar “talk.”

A man­ager who is merely tough will rarely cre­ate liab­il­ity. A man­ager whose con­duct causes doc­u­mented psy­cho­lo­gical injury may.

When har­ass­ment, bul­ly­ing or intim­id­a­tion con­trib­utes to a recog­nized men­tal-health con­di­tion, employ­ers may face human rights claims, work­place safety invest­ig­a­tions, aggrav­ated dam­ages and, in some cases, sub­stan­tial repu­ta­tional harm.

The mod­ern work­place increas­ingly recog­nizes that psy­cho­lo­gical safety is not simply a human resources object­ive. It is a legal oblig­a­tion.

None of this means employ­ers should lower stand­ards. Quite the oppos­ite.

Organ­iz­a­tions suc­ceed because lead­ers demand excel­lence. Employ­ees are hired to per­form and man­agers are entitled to hold them account­able when they fall short.

But there is an import­ant dis­tinc­tion between demand­ing excel­lence and strip­ping people of their dig­nity.

One drives per­form­ance. The other cre­ates liab­il­ity.

Whatever the facts ulti­mately reveal about con­di­tions inside the PMO, the broader les­son extends far bey­ond polit­ics. No employer is above the law. Not a pub­lic com­pany. Not a law firm. Not a gov­ern­ment depart­ment. And not the office of the prime min­is­ter.

Power­ful organ­iz­a­tions often assume that res­ults excuse beha­viour. Cana­dian courts have repeatedly demon­strated oth­er­wise.

Tough­ness is legal.

Intens­ity is legal.

Even a dif­fi­cult per­son­al­ity is legal.

Humi­li­ation, har­ass­ment and con­duct that causes psy­cho­lo­gical harm is not.

That is where man­age­ment stops and liab­il­ity begins.

Howard Levitt is senior part­ner of Levitt LLP, employ­ment and labour law­yers with offices in Ontario, Alberta and Brit­ish Columbia. He prac­tises employ­ment law in eight provinces and is the author of six books, includ­ing The Law of Dis­missal in Canada. Michael H. Kennedy is an asso­ciate at Levitt LLP.