Have you been fired… without realizing it?

I often get questions from employees who wonder whether they are required to accept changes made to their job duties, work location or salary, with which they do not agree. The term ‘constructive dismissal’ is a type of wrongful dismissal that may apply in these situations.

What is constructive dismissal?
Whenever your employer makes a major change to an essential aspect of your working relationship, your employer is basically ending the terms of your existing contract of employment and imposing new terms. If you do not agree to these new terms and you threaten to resign or you actually resign, the law does not see it as a resignation, but rather as a dismissal by your employer. In effect, your employer has dismissed you first by unilaterally making an unwanted change to your employment: a constructive dismissal.

Have I been constructively dismissed?
For a constructive dismissal to occur, your employer must have unilaterally (i.e. without agreement from you) imposed a fundamental change to the employment relationship or made a unilateral change to a significant term of your contract of employment (whether your contract is written or unwritten). Canadian courts require the change to be fundamental, severe, serious, unilateral and substantial. When there is a constructive dismissal, the dismissal is treated like a termination ‘without cause’ and the employee is entitled to a severance package.

A constructive dismissal may occur if your employer reduces your pay or makes significant changes to your work location, hours of work, authority, or position. For example, if your work in Toronto, but your employer wants to relocate you to Winnipeg, this move would be a fundamental change to the terms of your employment. Similarly, if you are earning $100,000.00 per year and your employer wishes to reduce your salary to $75,000.00 this may also be a constructive dismissal.

Constructive dismissal may also occur in situations where your employer harasses or abuses you, or gives you an ultimatum to “quit or be fired.” Canadian courts recognize these situations as constructive dismissals because an employer has an implied legal duty to treat its employees with dignity, civility and respect – a breach of these duties would be a breach of the employer’s contract with the employee. That said, not all ‘undesirable’ conduct by an employer will meet the legal threshold to be considered a constructive dismissal: for a constructive dismissal to occur, the undesirable conduct must be severe and serious.

Constructive dismissal is tricky because it is fact-based and the facts in each particular case will determine whether or not a dismissal has occurred. Furthermore, how an employee deals with a constructive dismissal is equally important. In some situations, an employee may be required to resign right away after the constructive dismissal to preserve his or her legal rights. In other cases, an employee may be required to stay in his or her job and work through a notice period. For these reasons, it is always best to consult an employment lawyer to determine whether you have been constructively dismissed and what actions you should take to preserve your legal rights.

If you or someone you know has a possible constructive dismissal, contact us to schedule a consultation.