Constructive Dismissal Lawyers Calgary

What is constructive dismissal?

In the normal course, an employer may terminate an employee for just cause (in which case no reasonable notice is owed) or without cause (in which case reasonable notice is owed). A constructive dismissal differs from both of these situations and occurs when an employer breaches an essential obligation imposed by the employment agreement which effectively terminates the employment contract. This is referred to as a “repudiatory breach”. Even though the employee is not dismissed from employment, when an employer commits a repudiatory breach, the employee can resign and advance a claim for constructive dismissal.

Constructive dismissal takes two forms. The first is a single unilateral act that breaches an essential term of the employment contract or second, a series of acts taken together that show an intention on the part of the employer to no longer be bound by the employment contract.

For employees that were terminated without grounds for dismissal, learn about how our wrongful dismissal lawyers can help.

What constitutes a repudiatory breach?

Minor or ancillary breaches will not give rise to a claim for constructive dismissal. Assessing constructive dismissal is not a one-size fits all analysis; it is highly fact dependent. A comprehensive assessment of all the relevant facts is crucial to determining whether an employee has been constructively dismissed.

Examples of unilateral acts on the part of the employer giving rise to a constructive dismissal include a demotion, a change in renumeration, change in responsibility or seniority, or a change in work location. An example of a series of acts taken together to evidence an intention on the part of the employer to no longer be bound to the employment agreement would be the existence of a poisoned work environment. Over time, the poisoned work environment could constitute a repudiatory breach.

What options are available to an employee in the face of a constructive dismissal?

The burden is on the employee to establish they were constructively dismissed. There are three options an employee may consider when faced with a repudiatory breach from their employer:

  1. First, the employee does not indicate they are rejecting the new terms, continues working and may accept the change in the terms of their employment, either expressly or implicitly through acquiescence, in which case the employment continues under the altered terms. The employee may have an option in this case to sue for the reduction in income or the value of benefits as damages.
  2. Second, the employee may reject the change and sue for damages if the employer insists on continuing to treat the relationship as subject to the change. This is termed a “constructive dismissal”.
  3. Third, the employee may make it clear to the employer that they are rejecting the new term of employment. The employer is free to respond to this rejection by termination the employee with proper notice and offer re-employment, if it chooses, on the new terms. If the employer does not do this but continues to allow the employee to continue working under the original employment contract, then the employer will be said to have acquiesced to the employee’s position.

With respect to the first scenario above, the length of time an employee can work under the new terms before acquiescence is found varies and is fact-specific. The test applied by the courts is that of “reasonable time”. The employee must indicate to his or her employer within a reasonable time whether they accept the change to their employment, the repudiatory breach, or not. What constitutes “reasonable time” is a fact specific decision but case law suggests three months is an upper limit. Employees should be communicating within a reasonable after the terms of their employment has changed, that they are rejecting the changes to their employment. Failure to do so risks a court finding they acquiesced to the changes and cannot now claim they were constructively dismissed.

Working through a constructive dismissal situation can be difficult for employees. Employer and employee may disagree as to what constitutes a repudiatory breach. Thus, an employee is often left in an unenviable situation of staying in their employment and accepting the change or leaving their employment and claiming constructive dismissal. Once before the court, the employee bears the burden of proving they were in fact constructively dismissed. A successful case will find the employee with an award of reasonable notice damages and some costs. Whereas an unsuccessful case will find the employee out of their job, with legal costs and no reasonable notice damages.

As in any wrongful dismissal case, the employee also has a duty to mitigate their damages in the case of an alleged constructive dismissal by looking for new employment.

Claiming constructive dismissal is a decision requiring a careful risk/benefit analysis. The advice of an employment lawyer should be sought before taking this step. Our team specializes in employment law for employees to help clients achieve a fair outcome.

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