Constructive Dismissal: The unapparent termination

By Merovitz Potechin on Thursday March 12, 2020.

Both employees and employers alike must be aware of how changes and acts in an employment relationship can result in constructive dismissal.

What is constructive dismissal?

Constructive dismissal can take many forms. Among them, changes to an employee’s job title, responsibilities or salary or a toxic work environment may be considered – based on the particular facts of the case – to meet the constructive dismissal threshold. When the employer’s conduct shows an intention to no longer be bound by the terms of the employment contract, the employee has the choice of either accepting the conduct, or treating the conduct as the employer’s rejection of the contract and suing for wrongful dismissal.

Constructive dismissal can take two forms:

1. A single significant act of the employer, or,
2. A series of acts that, taken together, demonstrate the employer no longer intends to be bound by the contract.

In either case, the employee bears the burden of showing that there was a fundamental change in the employment relationship.

Claiming constructive dismissal

A claim for constructive dismissal can be assessed two ways. The first requires a review of the specific terms of the employment contract to determine if a change made by the employer constitutes a breach. If the change is a breach, it must have substantially altered an essential term of the contract. It must be clear that whatever change was made fundamentally altered the employment contract.

The second way allows for constructive dismissal to be made out when, in light of all the circumstances, the employer breached the employment contract and a reasonable person would believe that the employer no longer intended to be bound by the contract. Specifically, the employee does not have to point to an individual change. Instead, the focus is on whether the employer’s course of conduct shows an intention to no longer be bound to the terms of the agreement.

Deciding what to do next

In determining whether an employer’s conduct amounts to a constructive dismissal, we ask whether the conduct was such that a person in the employee’s circumstances should not be expected to continue working. For both employees and employers, there are risks. For employers, they must be wary of changing elements of an employee’s contract in such a manner triggers a constructive dismissal and should weigh whether fundamentally altering employment contract is beneficial. For the employee, they are faced with the difficult choice of quitting their job and possibly being without income for the foreseeable future or continuing a working relationship that the employer has altered fundamentally.

Constructive dismissal is a complex issue in employment law. The application of this principle will vary depending on the facts of each unique situation. For both employees and employers, it is important to get advice on constructive dismissal before making a change to an employee’s terms of engagement or quitting your job and bringing a court action. For more information, please contact our Employment Law lawyers.