What is Constructive Dismissal?

Work is a big part of our lives.  For many of us, it provides not only income stability, but meaning and dignity.  Indeed, the difference between a job you love and one that you need to drag yourself to everyday can be the difference between feeling fulfilled, and feeling you’re in a funk.  The stress can accumulate, undermining your health and well-being as well as those of the people you care about. At some point, a miserable job simply isn’t worth sticking with.

So what should someone in such a situation do?  Resign?

Resignation will generally mean that you give up your right to a severance package – either termination pay and, perhaps, severance pay, or common law reasonable notice pay.  For many people, that is too much to give up. A severance package is meant to cushion the blow of a job loss, by providing income for a period of time considered sufficient to secure alternative employment.  Without that, you would be out of a job and out of an income, all at once. Any benefits you had through your employment would also be abruptly lost. While this scenario would be distressing for just about anyone, for the many Canadians living paycheck to paycheck, this feeling of being stuck between a rock and a hard place can be particularly pronounced.  The stakes, after all, are often quite high.

Fortunately, tolerating the intolerable or walking out may not be your only options.  In the right circumstances, you may be able to make a claim for ‘constructive dismissal’, thereby resigning your position but still retaining your right to a severance package.

Constructive dismissal occurs when an employer unilaterally and substantially changes an essential term of your employment contract – that vitally important contract governing the employment relationship between you and your employer – without your consent (explicit or by implication), or otherwise demonstrates an intention to no longer be bound by that contract, AND you thus you exercise your option to treat your employment as terminated.  While you have, technically speaking, resigned, a successful constructive dismissal claim means that you don’t lose the right to a severance package.

Here are some examples of unilaterally imposed changes that might justify a constructive dismissal:

  • Demotion
  • Reducing compensation
  • Reducing responsibilities, status, and/or changing reporting requirements
  • Requiring a move/change in geographical location
  • Laying off a non-unionized employee
  • Working in a poisoned work environment (namely in reference to bullying, harassment, discrimination, or improper discipline)

Please note that the above list is not exhaustive.  Each case must be assessed individually.

Now, it should also be clear that there is a risk inherent to taking this path – a constructive dismissal claim is no “get out of jail job free card”.  Typically, an employer will deny the constructive dismissal has taken place.  If they ultimately succeed with this position, that will mean that you, the employee, has simply resigned, thus forfeiting the right to a severance package.  If the matter goes to court, and you lose, you may also be on the hook for substantial legal costs. The lesson here is not to roll over, but simply that you want to be careful that your claim is a strong one before you make it.  Only a qualified employment lawyer can provide the necessary guidance in such cases.

The change to the terms of your employment cannot be trivial.  Indeed, employers have the rightful prerogative to run their business, and so reasonable changes will not constitute a constructive dismissal.  The extent to which an employer can make changes without triggering a constructive dismissal will also be informed by the employment contract. For example, if your employment contract states specifically (and invalid contractual language) that a change in hours will not constitute a constructive dismissal, you may be out of luck if that change in hours was the only basis for your claim.  

You should also be careful not to condone the change(s) made by your employer, i.e. do not accept the changes to your employment, neither explicitly nor by implication.  While you may often be entitled to ‘test out’ the new job for a reasonable period of time, waiting too long to assert a constructive dismissal can render your claim void.  There is no set time limit, and, for obvious reasons, this is frequently a question that parties will fight over.

There are many other twists and turns that need to be considered in these cases, and addressing each is well beyond the scope of this piece.  Suffice it to say, then, that sometimes a risk is worth taking. A good lawyer can reduce that risk to a minimum, and, ultimately can help you to move on from an unsustainable position.  If your employer is treating you unfairly, it would be wise to speak to an employment lawyer. The lawyers at Tailor Law are ready to help you. To schedule a free consultation, in-person or over the phone, please call our office at 905-366-0202, or email Chelsea at admin@tailorlaw.com.

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