What is constructive dismissal?
A constructive dismissal occurs when an employer breaches an essential obligation in the employment agreement, which effectively terminates the contract. This is referred to as a “repudiatory breach.”
Constructive dismissal takes two forms:
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A single unilateral act that breaches an essential term of the employment contract, or
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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.
What constitutes constructive dismissal?
Assessing constructive dismissal is not black and white but depends significantly on the facts to determine whether it meets the criteria. Minor breaches are not sufficient to claim constructive dismissal.
Examples of unilateral acts on the part of the employer that may indicate a constructive dismissal include:
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a demotion
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a change in remuneration
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a change in responsibility or seniority
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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?
There are three options an employee may consider:
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Acceptance: The employee does not reject 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 the option in this case to sue for the reduction in income or the value of benefits as damages.The employee must indicate to his or her employer within a reasonable time (often up to three months) whether they accept the change to their employment, the repudiatory breach, or not.
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Rejection and return to previous employment arrangement: The employee may reject the change within a reasonable amount of time and await the employer’s response, which could be termination with proper notice and an offer of re-employment, if it chooses, on the new terms. If the employer does not do this and allows the employee to continue working under the original employment contract, then the employer will be said to have accepted the employee’s original position.
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Rejection and constructive dismissal claim: The employee may reject the change within a reasonable amount of time 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”.
As in any wrongful dismissal case, the employee must minimize their damages in the case of an alleged constructive dismissal by looking for new employment.
Working through a constructive dismissal situation can be difficult for employees. The employer and employee may disagree as to what constitutes constructive dismissal. 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 may award reasonable notice damages and some costs to the employee. But an unsuccessful case could leave the employee out of their job, with legal costs and no reasonable notice damages.
If you’re considering a claim of constructive dismissal, our employment lawyers can help with a careful risk/benefit analysis to determine how strong your case is and what the best next step would be for your particular situation.
Frequently asked questions about constructive dismissal
Constructive dismissal occurs when an employer makes fundamental changes to your employment contract or creates a hostile work environment that forces you to resign. By consulting with a lawyer, you can gain a clear understanding of your rights in the specific circumstances you are facing. They can explain the legal concept of constructive dismissal and help you assess whether your situation meets the necessary criteria. Constructive dismissal cases can be complex and require a thorough analysis of the facts and evidence. A lawyer experienced in employment law can review your case, assess the strength of your claims, and provide an objective evaluation of the potential outcomes. They can help you understand the legal standards that need to be met to prove constructive dismissal and advise you on the viability of pursuing legal action.
It is important to consult with a lawyer as soon as you think you have been constructively dismissed. Any delay in responding to your employer’s conduct may be construed as consenting to the conduct.
Constructive dismissal consultations reviews can generally be completed within a week. Subject to our availability.
Our standard fee for constructive dismissal consultations is $425, plus GST, although the fee may be higher if the facts of your case are particularly complicated. This fee includes reviewing of all materials provided in advance of the consultation, reviewing relevant precedents, attending the consultation, and answering follow up questions you have after the consultation.
Demotions or salary reductions can constitute constructive dismissal, where an employee can resign and sue for severance as if the employee was dismissed. In these situations, it’s important to speak with an employment lawyer as soon as possible.
If an employer is asking you to sign anything, speak with an employment lawyer. You are always entitled to seek legal advice as it relates to your relationship with your employer.