What is constructive dismissal?

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Understanding Your Employment Rights: What is constructive dismissal?

When you are hired for any job, you enter into an employment agreement with your employer. It might be a comprehensive written agreement or merely an oral understanding covering such things as your intended duties, hours of work and compensation.

In a constructive dismissal, your employer has not directly fired you. Rather, it has unilaterally made a substantial change to the terms of your employment without your implied or express consent. Constructive dismissal can also occur when the workplace environment becomes hostile or toxic.

With a termination, whether for cause or without cause, the employer signals its intention to let a worker go. With a constructive dismissal, the employer is attempting to make conditions so intolerable that the employee eventually resigns out of frustration.

According to the Government of Canada, constructive dismissal is sometimes referred to as “disguised dismissal” or “quitting with cause.” That is because it often occurs in situations where the employee is offered the choice of resigning or agreeing to a change in their employment agreement.

In today’s work environment, it is not unusual for job descriptions to change. With COVID, for example, many people began working remotely. Some changes are temporary, but when your role and responsibilities change substantially and permanently, the conditions of your original employment contract may no longer apply and a new agreement will be needed.

You can agree to a new employment contract but the employer must provide “fresh consideration” in return. The promise of continued employment is not sufficient. Your employer must offer you something of value – such as a raise or more vacation time – in exchange for you entering into the updated employment agreement.

Some people have confused wrongful termination with constructive dismissal. While in both cases the employer is attempting to avoid paying proper severance, the difference between the two is the way that the employment ends. In a wrongful dismissal, it is the employer who directly terminates the employment. In a constructive dismissal, the employee resigns as a result of the employer’s actions, although the employer effectively forced the resignation.

Without your consent

To be considered a constructive dismissal, the employer’s action must be done without your consent. If not, any variation is seen as an agreed change to the contract of employment.

The employer’s failure to meet its contractual obligations distinguishes a constructive dismissal from a regular resignation. But it is not merely how you view your employer’s actions that count. The seriousness of the employer’s failure as well as the amount of deliberation apparent in its actions are also important factors in determining whether there has been a constructive dismissal.

It is up to you to indicate to your employer that you do not accept the new conditions of employment. This can be done by explicitly protesting the new conditions, making it clear that you reserve the right to take legal action. It can also mean resigning within a reasonable period after the change. By not resigning or making your concerns known, you are essentially accepting the new conditions of employment.

Under the law, if you resign as a result of a constructive dismissal you have been effectively terminated without cause and typically would be entitled to the same severance package as someone who is wrongfully dismissed.

Know the signs of constructive dismissal

Just because your job has changed it doesn’t necessarily mean you have been constructively dismissed. For example, your boss can assign you to work at the company’s office across town. However, if you have been re-assigned to a different city, that may be considered constructive dismissal unless you knew that potential relocation was part of the job when you accepted the position.

Signs of constructive dismissal can include:

Reduced compensation This is a significant decrease in salary or loss benefits, typically more than 10 per cent.
Withheld remuneration This occurs when your employer refuses to pay wages owed to you.
Demotion This can include sudden change in job title or loss of responsibilities or being required to report to a previous subordinate.
Increased workload You may be faced with a change in responsibilities that make it difficult to fulfill family caregiving obligations.
Toxic work environment Examples of this are being unjustifiably disciplined, abused, harassed or discriminated against.
Sudden shift change These can be changes in your work schedule that disrupt your work-life balance.
Refusal to accommodate In this scenario, your employer fails to provide any workplace accommodations needed for you to fulfill your duties.
Temporary layoff This occurs if you are temporarily laid off in violation of your employment agreement.

What do I do if I suspect constructive dismissal?

If you believe you have been constructively dismissed you cannot afford to sit back and wait. If you fail to act within a reasonable amount of time, your employer can claim that since you continued to work, you tacitly accepted the change.

If you suspect you are being constructively dismissed, keep a record of any emails, texts or letters dealing with the change in your employment agreement. If you meet with your employer about your job, take clear notes about the issues discussed. If you find yourself in a toxic work environment, document any intolerable behaviour and the dates they occurred.

It is important to carefully consider your next move. Remember, constructive dismissal carries the same consequences for an employer as a finding of wrongful dismissal. If an employer is guilty of constructive dismissal you are entitled to receive termination pay and possibly severance pay commensurate with your length of service, position and other factors. Termination and severance packages can include payments for lost wages, benefits and bonuses.

However, constructive dismissal is a complicated area of the law and proving a case can be challenging since it requires proof that your employer breached your employment agreement and did things that were serious enough to force you to quit your job.

Before deciding to resign or confront your employer, you should consult an employment lawyer who can identify if you have a legitimate claim, discuss your options and prepare a response to your employer. This can include sending your employer a demand letter, filing a statement of claim or pursuing other legal options.

We are here to help

If believe your employer has changed your employment relationship without your consent don’t quit before you call us. The Walter Law Group has been trusted as experts in employment law for three decades and we can hold employers accountable and advocate for compensation on your behalf.

We advocate for clients in Mississauga, Oakville, Brampton, Toronto, the GTA and across Ontario and we will work diligently to ensure you get the fair treatment you deserve.