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
CONSTRUCTIVE DISMISSAL EXPLAINED
How Do You Know if You Have Been Constructively Dismissed?
If your employer has made significant changes to the terms of your employment unilaterally, you may have been constructively dismissed. The negative change to the employment terms includes a reduction in pay, change of work location, hours, duties and responsibilities altered, and/or a change in your workplace status.
Another way to be constructively dismissed is if your employer has harassed or abused you, and/or made your working conditions so intolerable due to discrimination that you can no longer work.
However, it is important to note that a small change in pay, hours or location, etc., does not constitute a constructive dismissal. It must either be many minor changes (death by a thousand cuts) or a substantial change.
Can You Keep Working Through Constructive Dismissal?
While many people are worried about leaving their job even though there have been substantial changes to their employment, it may be necessary. Otherwise, you may lose your ability to sue for constructive dismissal. This is called condonement. If you continue to work regardless of the changes, you may be deemed to have accepted the substantial changes to your employment.
Therefore, it is important to act on the changes promptly. Leaving your job may be much more beneficial in the long run when suing for constructive dismissal. Quitting is generally the first step in claiming a constructive dismissal. Waiting too long or not quitting at all can derail your case.
Difference Between Constructive Dismissal and Wrongful Dismissal
The main difference between a constructive dismissal and wrongful dismissal is that a constructive dismissal does not arise from the employer deliberately terminating the employee. Rather, they have made significant changes to their employment, but they did not intentionally fire them.
A constructive dismissal occurs when the employer has made a significant change to the terms of the employment contract without providing consideration or receiving consent from the employee. This can be a change to the working environment or due to harassment or discrimination. Another way constructive dismissal can occur is if the employer makes a series of less significant changes that results in ‘a death by a thousand cuts’. In other words, the employer has done a number of things that has made it evident it no longer wishes to be bound by the terms of the employment contract.
A similarity between wrongful dismissal and constructive dismissal is the way damages are calculated. However, if the conduct of the employer was so egregious in a constructive dismissal situation, the court may also award punitive or aggravated damages.
What is Unilateral Change?
If an employer implements a change without getting the consent of the employee or providing consideration in return for that change, the employer has made a unilateral change. To have a successful constructive dismissal claim, an employee must not accept this change explicitly or implicitly. Otherwise, the employee will be deemed to have accepted the unilateral change. At that point, a claim for constructive dismissal will likely be extremely difficult.
What is Substantial Change?
While there is clear definition of what constitutes a significant change, to violate the employment contract, it must be substantial. An example of this is forcing an employee who works in Toronto to work in the Muskoka location. On the other hand, a change of location from Downtown Toronto to Midtown Toronto would very likely not meet the definition of substantial change.
Another common change is regarding compensation. Again, there is no clear line of what percentage reduction in compensation results in a substantial change. However, a 5% reduction will not be enough as a foundation for a successful constructive dismissal claim. A 10% compensation reduction may be debatable. However, a 15% reduction will likely be enough for a constructive dismissal.
There is no exhaustive list of changes that can be considered a significant change in every case. A court will look at each situation and examine all the circumstances. Essentially, what is deemed a substantial change will vary from case to case.
CONSTRUCTIVE DISMISSAL VS WRONGFUL DISMISSAL
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.
What is Not Constructive Dismissal?
It is important to note that there are actions your employer can take that may be unwanted by the employee but are not considered substantial changes worthy of constructive dismissal.
The best example of this is discipline. So long as it is warranted and appropriate, an employer can discipline an employee, and it will not be deemed a constructive dismissal. An employer is entitled to discipline its employees. Again, as long as it is warranted based on the actions of the employee.
Another example of what is not considered a constructive dismissal is if the employee accepts the change the employer makes. If you do not act quickly against the unilateral change to your employment, you will have been deemed to condone the change. At that point, you will no longer be able to successfully claim for constructive dismissal.
When Can You Quit for Constructive Dismissal?
You can quit when your employer makes a substantial change to your employment unilaterally. This is when a constructive dismissal occurs. If you do not quit, you will be deemed to have condoned the change. If you are not sure if a substantial change has occurred, contact a qualified lawyer so you can receive proper analysis and advice.
Canadian Employment Law
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