In Ontario, constructive dismissal occurs when an employee has not been dismissed, but the terms or conditions of their employment have changed significantly.
What is Constructive Dismissal?
Constructive Dismissal is a situation in which a hostile or toxic work environment has been created, or where there has been a significant change to an employee’s position or duties, that the employee has not agreed to or condoned. In some situations, an employee may resign and still make a constructive dismissal claim, as the resignation may not be considered “voluntary” due to the circumstances of the resignation.
Example Hostile or Toxic Work Environment
- The employer fails to prevent workplace harassment
- The employer bullies or discriminates against, or fails to prevent other employees from bullying and discriminating against the employee
- The employee experiences significant and/or repeated vague and unfounded accusations of poor performance
- Employee’s authority and respect with co-workers has been seriously undermined and compromised
Example Changes to Employment Relationship
- Altering the employee’s reporting structure, job description, or working conditions
- Lowering an employee’s compensation
- Changing the hours of work
- Imposing a suspension or leave of absence
- Relocating the employee’s workplace
The Remedies for Constructive Dismissal
These changes may relate to, among other things, compensation, title, duties, office location or working hours. Recent case law suggests that abusive behaviour by an employer may also constitute constructive dismissal. The current leading decision is Potter v. New Brunswick Legal Aid, 2015 SCC 10. A constructive dismissal can be found in one of two ways: a. the employer “substantially alters an essential term of the contract of employment”; or b. the employer pursues a course of conduct which “evinces an intention to no longer be bound by the contract.” The test is not whether the employer intends to be bound, but whether a reasonable person in the circumstances of the employee would think that the employer has objectively evinced the intention to no longer be bound.
The remedies for constructive dismissal are similar to those found in a wrongful dismissal suit. This is because the terms of employment have been substantially altered or the employer’s conduct shows an intention to no longer be bound by the employment contract, as though the employee has been dismissed. In this situation, the employee is entitled to reasonable notice because the employment contract has ended and they have essentially been terminated from the job that they signed up for. Constructive dismissal is an extremely complex area of employment law. Professional legal advice should be sought at an early stage to help you negotiate an exit package. Please note that the above information does not constitute legal advice. It is general information about the law. If you require legal advice and assistance in an employment matter, please contact the experts at Ball Professional Corporation.
Things to Know
What may be considered constructive dismissal for one employee may not apply in every employment situation. For example, although relocating an employee’s workplace may be a constructive dismissal, that may not be the case if the employment contract states that the employer is allowed to relocate the employee’s workplace, or if the employee has either accepted relocation in the past or waits too long to protest against the relocation (i.e., the employee has condoned the employer relocating their workplace).
In constructive dismissal cases, the timeframe in which an employee protests against a change in their employment situation and makes a constructive dismissal claim is important. While an employee is allowed some time to “try out” the new situation before claiming constructive dismissal, the employee needs to be aware that if they “try out” the situation for too long, they may be deemed to have condoned the change and therefore no longer have a constructive dismissal claim. Unfortunately, there are no clear guidelines on exactly how long is “too long” when “trying out” the new employment situation. It is important to consult a lawyer as soon as possible to receive guidance on this matter.
If the employer changes the terms of employment, the employee could work “under protest.” This means that the employee would make it clear to the employer that they do not condone the changes that have been made to the terms of their employment, but that they will continue to work under protest. This is not a permanent solution, and the longer an employee continues to work “under protest,” the more likely it will be deemed a situation in which the employee has condoned the changes. It is important that the employee is either communicating and negotiating, or has their lawyer communicating and negotiating about the matter with the employer while the employee is working under protest. Stacey Reginald Ball is an experienced employment lawyer with Ball Professional Corporation. Our office is located in Toronto, Ontario, and handles various employment law matters, including wrongful dismissal. If you have questions regarding constructive dismissal, please consult a lawyer for advice.
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