LOL, I agree that quitting ones job in this economy probably isn't the optimal solution. The job market is just as tough in Canada as the US in many places.
I suspect tho, her boss is going to make her life miserable in more ways than just this. He sounds unstable. So, rather than outright quitting, I suggest the OP definitely be applying elsewhere as an 'in case'. 'Luck favours the prepared' and such.
Second thoughts can generally be amended with judicious action; injudicious actions can seldom be recovered with second thoughts.
--Cyteen by C.J.Cherryh