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Constructive Dismissal: What You Need to Know

Constructive Dismissal: What You Need to Know

What is Constructive Dismissal?

Constructive dismissal is the term used for situations where an employer does not directly terminate an employee but has made significant and unilateral alterations to the employment contract. This means that the employee has not expressed any form of consent to the changes, essentially creating an unfavorable environment for the employee so the employee is forced to resign from the company.

Canada law views constructive dismissal as similar to a wrongful dismissal. The employee is entitled to appropriate compensation, the bare minimum of which would be pay in lieu of notice or, if the case is severe enough, aggressive damages.

What Are Some Instances of Constructive Dismissal?

Constructive Dismissal: What You Need to Know

Whether or not the Canadian courts will deem it as constructive dismissal depends on the stipulations of the employment contract and the particular details of the employee’s circumstances. In the past, the Canadian courts have ruled that an employee was constructively dismissed based on the following situations:

  • changes to a job description
  • decreased responsibilities or status
  • reduced compensation
  • shortened work hours
  • imposed suspension or forced leave
  • employee relocation
  • threats of demotion

When Can a Constructive Dismissal Claim Be Considered Valid?

Constructive Dismissal: What You Need to Know

For a case to be considered constructive dismissal, the alterations the employer has made to the employment contract are:

  • unilateral
  • fundamental

Additionally, the employee must reject the changes. If the employee were to agree to the alterations, it will not be seen as constructive dismissal. Agreement to the changes does not necessarily have to be explicit. An employee may be deemed to have “accepted” the contract changes if they remain within the company’s employ for a certain period of time without taking any measures to negotiate or dispute the changes.

Generally, an employee needs to quit their job to make a successful claim of constructive dismissal. They must hand in their resignation within a “reasonable” amount of time. However, the law does not explicitly state exactly how much time is considered reasonable. This is a matter of contention between employees and employers and is determined depending on the nature of the changes as well as the employee’s personal circumstances.

Notably, there have been a few instances in which constructive dismissal claims were considered valid even when the employee decided to stay and continue their role in the company. Cases such as:

● when an employee chooses to remain in the company to avoid significant loss of income but openly express their objections to the new working conditions
● when an employee remains employed but have officially initiated legal actions against the employer
● when an employee continues to work for their employers and have not filed a formal complaint, but are in the process of negotiating their working conditions and the terms of the contract

However, these are isolated instances and may not hold true for many circumstances.

How Does An Employee File a Constructive Dismissal Claim?

Constructive Dismissal: What You Need to Know

Again, an employee normally has to have resigned from their job in order to make a constructive dismissal claim. However, this can be a risky decision. It is crucial to seek the legal aid of an employment lawyer in Toronto or in your area.

An employment lawyer can spot the nuances in a situation and determine whether or not you have a chance at a successful claim. Additionally, depending on your circumstances, an employment lawyer can acquire for you additional compensation besides the pay in lieu of notice.