New York’s “At-Will” Doctrine and a Quebec Constructive Dismissal Claim Brought by a Senior Executive

In Cicale c. Swiss International Air Lines Ltd., the Superior Court of Québec addressed an international employment dispute after a proposed transfer of a long-standing Country Manager back to New York was alleged by the employee to constitute constructive dismissal. The decision provides an analysis of the applicable law in international employment relationships, the proportionality of disciplinary measures imposed on senior employees, and the employee’s duty to mitigate damages. Although the constructive dismissal claim was ultimately dismissed, the Court ordered the employer to reimburse the employee’s legal costs resulting from the postponement of the trial caused by its late procedural conduct.

The employee in question was first hired in 1999 as a reservation agent. In 2011, she was temporarily appointed to the position of Country Manager in Canada, which became her permanent role in 2012. As Country Manager, she acted as Power of Attorney for the Canadian division and had the authority to manage bank accounts, effect payments, and represent the company in legal matters.

In 2014, it was discovered that, in addition to receiving her monthly housing allowance of $2,500, the employee had approved for herself a company expense in the same amount to be paid directly to her landlord. When confronted, she claimed that this arrangement had been verbally approved by the company’s former Vice President, who had since resigned.

In June 2014, the employee was informed, by way of a disciplinary letter, that her functions in Canada would cease and that she would instead be offered a position in the United States. The offer maintained her management status and included the same benefits. However, it entailed a $500 monthly decrease in salary. Considering this to constitute constructive dismissal, the employee rejected the offer, which ultimately led to the lawsuit in question.

In Québec, the Civil Code governs the rights of employees with respect to termination. The right of an employee to receive reasonable notice in the absence of serious grounds for dismissal is a matter of public order and cannot be derogated from by way of a contractual clause. What constitutes a reasonable notice period depends on various factors, including the nature of the employment, the specific circumstances of the case, and the duration of the employment.[1]

The employer argued that, as a U.S. company headquartered in New York, the “at-will” employment doctrine applied, meaning there could be no claim for unjustified dismissal in absence a specific contractual clause allowing for such recourse.[2]

The Superior Court rejected this position. Pursuant to the Civil Code, an employee benefits from the mandatory rules of the state where they habitually carry out their work.[3] The Court’s analysis of the facts, including the employee’s permanent position in Montréal, her tax filings, and communications with her employer concerning her stay and role in Canada, led it to conclude that Québec was in fact the place where she habitually carried out her functions.

Having concluded that Québec law applied, the Court turned to whether the proposed transfer to New York constituted constructive dismissal.

The employee argued that the new role was “so different and disadvantageous compared to her position as Country Manager” [4] in Canada that it amounted to a unilateral and substantial modification of her employment. Under Québec law, constructive dismissal occurs where an employer imposes significant changes to essential terms of employment such that a reasonable person would view the contract as terminated.[5]

The Court approached the analysis in two stages.

First, it examined whether the employee’s conduct justified dismissal, whether direct or constructive, in order to do this, the nature of the misconduct was considered. The Court noted that, the employee had approved a surplus expense which was paid out on her behalf for almost two years and effectively doubled the written allowance. Given her senior position and degree of autonomy, this constituted a reasonable cause for concern. However, the Court concluded that dismissal would have been disproportionate considering her term of employment, having worked for the company since 1999, and absence of other misconduct.

The Court then turned to the second question, whether the decision to transfer her back to New York nonetheless constituted constructive dismissal. Although the transfer entailed modifications to her functions and a $500 monthly reduction in salary, the Court found that the employer’s concerns were directly related to her position in Canada. The new role maintained her management status and benefits and was offered in the context of a broader reorganization. In the circumstances, the Court held that the changes were reasonable and did not amount to a substantial and unilateral breach of the employment contract. As a result, the constructive dismissal claim was dismissed.

The Court rejected the employee’s claims for damages in lieu of notice and for moral damages. In doing so, it emphasized that, in the absence of constructive dismissal and of any “evidence of abuse of right, bad faith, or gross misconduct” [6], the claims for damages could not succeed.

However, the Court noted that even if constructive dismissal had been established, the employer’s argument regarding the employee’s duty to mitigate damages would have remained valid. Given that the transfer-back proposal contained reasonable conditions in the circumstances, it should have been accepted, even if the employee intended to seek alternative employment simultaneously.

Moreover, the employee’s claim for 24 months of pay, based on the time allegedly required to secure new employment, was found to be significantly overstated. After deducting the personal time she took to travel, the Court concluded that her employment search lasted approximately one year.

The employees claim for damages due to the employer’s postponement of trial, was granted.

The following paragraphs are particularly relevant to the Court’s analysis of the dismissal:

[34] Subject to the evidence, the claim for constructed or unjustified dismissal is available under Quebec law. In Quebec, the right of an employee to a reasonable notice of termination or to an equivalent indemnity is a matter of public order.14 The employer must terminate an employment contract by giving notice of termination to the other party, unless serious reasons justify resiliating the contract without prior notice (art. 2091 and 2094 C.c.Q.). The notice of termination must be given in a reasonable delay, taking into account, in particular, the nature of the employment, the specific circumstances in which it is carried on and the duration of the period of work.

(…)

[63] The jurisprudence of the Supreme Court teaches that work constitutes a fundamental aspect in the life of an individual. It is an essential component of a person’s sense of identity, self-esteem and emotional well-being.

[64] It is thus essential to balance the sanction imposed upon an employee who is the author of misconduct with the gravity of his misconduct.

[65] The drastic sanction of dismissal will only be justified if the misconduct is of such seriousness that it is incompatible with the continuation of the employment relationship. Dishonesty which goes to the very heart of the employer-employee relationship may constitute grounds for dismissal.

(…)

[67] A court called upon to determine the appropriateness of a sanction, whether a dismissal or any other sanction, must consider (1) the nature of the misconduct complained of, (2) the context of the misconduct and (3) the proportionality of the sanction imposed.

[68] Factors considered as relevant in the case law include the employee’s hierarchical position and level of responsibility, seniority, degree of functional autonomy, the difficulties faced by the company, the employee’s awareness of the misconduct, the personal benefit derived from the misconduct, the employee’s age, past conduct, and the workplace policies.

(…)

[105] The decision by Swiss to “transfer back” Ms. Cicale to New York was appropriate under the circumstances. This sanction did not constitute a constructive dismissal. The parties’ dispute over Ms. Cicale’s self-approval of the rent expense, and Swiss’ disciplinary concerns in relation thereto, were directly linked to the geographical location of her assignment. The concern raised by Mr. Heymann to have Ms. Cicale work closer to his supervision was justifiable in the circumstances, when the explanations given were not satisfactory.They still are not, as discussed above.

(…)

[136] Furthermore, the claim for moral damages has no merit in the absence of any evidence of abuse of right, bad faith or gross misconduct on the part of Swiss. Swiss acted within its rights in deciding to transfer Ms. Cicale back to New York and formulated a suitable job proposal under the circumstances.

[1] Civil Code of Québec, C.c.Q., arts. 2091–2092.

[2] Cicale c. Swiss International Air Lines Ltd., 2025 QCCS 4421, paragraph 33.

[3] C.c.Q., art. 3118.

[4] Cicale v. Swiss International Air Lines Ltd., supra note 2, para. 60.

[5] Farber v. Royal Trust Co., [1997] 1 SCR 846.

[6] Cicale v. Swiss International Air Lines Ltd., supra note 2, para. 136.