Back to blog

“Your Boss Said What?!?….”: Understanding a Constructive Dismissal

“Your Boss Said What?!?….”: Understanding a Constructive Dismissal

At the base of most employment law issues, is the “employment contract” between an employee and their employer. In a nutshell, the employment contract is the who, what, where, when and why of a job. This contract governs fundamental terms of employment, including salary, responsibilities, hours of work, and basic expectations of the employee and the employer.

Employment Contract Law

In previous postings, I wrote that an employer can put an end to this employment contract if they provide their employee with reasonable notice of termination. If this reasonable notice is not provided, the termination is considered to be a “wrongful dismissal”, to which the employee may be entitled to damages. I have also recently written about “just cause termination”, where the employee’s conduct is so incompatible with their employment, that the employer can put an end to the employee’s job without providing any notice or compensation. A just cause termination may apply in situations such as employee theft, gross insubordination, dishonesty and workplace violence.

The Fundamental Questions of Your Employment Contract

But what happens when the employer’s conduct is fundamentally opposed to the employment contract? Does the employee have any recourse in these types of circumstances?

In short, the answer is “yes”. In fact, it has long been recognized by law courts that where an employer unilaterally makes a substantial change to an employee’s contract, it may be found that the employer has breached its contractual obligations. In these circumstances, the employee may consider that they have been “constructively dismissed”, or that their employer, through its own conduct, terminated the employment relationship. When this happens, the employee can then claim damages from the employer in lieu of reasonable notice, as they would do in a wrongful dismissal claim.

Constructive Dismissal vs Wrongful Dismissal

Each constructive dismissal case is dependent on the facts. However, some common themes which have been found to constitute constructive dismissal in the past include demotions, change in job responsibilities, a significant change in working conditions, a reduction in pay or perhaps a relocation of place of work.

There is also some case law supporting the idea that a constructive dismissal can be cumulative. This suggests that there does not need to be one single act (such as a demotion) which would constitute a breach of contract. Think of an employee whose working environment becomes increasingly toxic. Over a period of weeks or months, the employee may be subject to workplace bullying, harassment or discrimination. While each individual case of harassment may not constitute constructive dismissal, as tensions mount the employment contract may eventually be considered fundamentally altered. In circumstances such as these, the employee may argue that his employer has breached the fundamental terms of his employment contract, and that he can therefore consider himself as having been dismissed.

There are two aspects of a constructive dismissal claim which should be of concern to employees. First, although there are a few rare examples of decisions stating otherwise, the employee claiming constructive dismissal must consider that their employment has been terminated, and they must therefore resign from their duties. This means that the employee is now without work, and therefore without any form of employment income. Compounding workplace stress is now a financial stress and the stress of litigation.

Dismissal Claims

The second item of concern is the burden of proof. The facts of a constructive dismissal claim are often contested and hotly debated. For example, an employee may claim that he or she was the subject of workplace harassment; a claim which without question would be opposed by the employer. An employee may also claim that he or she was demoted, while the employer may respond that it was a lateral transition. If a judge agrees with an employer’s version of facts, not only is the employee now without a job, but he or she is also now without any form of compensation for their resignation.

For employees who feel undermined by unilateral changes of employment by their employer, or for employees who see their working environment degrading around them, a constructive dismissal claim may be part of a larger legal strategy. However, like all litigation, a constructive dismissal claim is not without risk, and should only be pursued after careful reflection and after consulting with an employment lawyer.

For employees seeking legal advice regarding constructive dismissal, contact our Kelowna Law Firm for legal advice and speak with a lawyer that specializes in employment law.

This article is prepared for educational purposes only and is not legal advice.