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WHAT IS CONSTRUCTIVE DISMISSAL?

Introduction

Canadian and Alberta employment law recognizes the importance of employment in a person’s life, and the emotional upset linked to being terminated. Thus, the courts have determined that an employee’s position and contract cannot be unilaterally altered by their employer without compensation due to the impact the change may have. Therefore, the Supreme Court of Canada has outlined that employers cannot unilaterally change, or breach the essential terms of an employee’s contract, without taking the appropriate steps to mitigate the effects of the changes. Further, employers cannot create a situation in which it is no longer feasible for an employee to continue their employment. In other words, an employer cannot create a work environment in which an employee feels as though their only option is to quit. If your employer has changed one of your employment conditions, or you have quit due to an intolerable work environment, you may be entitled to an award on the basis of constructive dismissal. 

What is constructive dismissal in Canada?

As noted above, constructive dismissal occurs when an employer unilaterally changes the terms or conditions of an employee’s contract or employment. Moreover, constructive dismissal can also be implied when an employee quits on the basis of an employer creating a work environment that makes it impossible for the employee to continue their work with the employer. 

Some examples of actions by an employer that change the fundamental terms of employment relationship include the following:

  • The employer demoting an employee or reducing the employee’s remuneration;
  • The employer refusing, buy words or conduct, to allow the employee to fulfill the conditions of employment (locking an employee out of a building or removing support staff);
  • Inconvenient geographic transfers;
  • Anything that would set the employee up to fail at their job; 
  • The employer harassing or abusing an employee; or 
  • The employer giving the employee the choice of accepting the fundamental change or being fired. 

Some examples of actions by an employer where they have created an environment that is impossible for an employee to continue: 

  • Not intervening in circumstances of workplace harassment; 
  • Failing to correctly address and investigate a grievance; 
  • Allowing or participating in offensive jokes about sex, race, or disability; 
  • Harassing or discriminating against an employee;
  • Refusal of reasonable accommodations related to disability, and other circumstances; 
  • Creating promotion or pay raise obstacles; 
  • Embarrassing or humiliating an employee in front of colleagues or clients; 
  • Suspending or excluding an employee without a solid, or proven reason;
  • Beginning disciplinary proceedings against an employee without any solid foundations for doing so; 
  • Giving the employee an excessive workload, which is likely to make them fail, feel pressured or become toxically stressed; etc. 

The above examples give an idea of different scenarios in which constructive dismissal may come about. However, this is not an exhaustive list. It is important to contact an experienced employment lawyer if you believe your circumstances warrant a constructive dismissal. The experienced employment lawyers at Osuji & Smith will be able assist with your inquiries.

How can an employer legally change the terms of an employment contract?

Although an employer cannot unilaterally change employment conditions, there are some ways in which an employer can legally change an employee’s role within the company. However, in order to do so, an employer must do two things prior to making the change. 

  1. The employer must give the employee reasonable notice of the change; and 
  2. The employer must receive informed consent from the employee about the change.

First, Canadian law has determined that even dramatic changes to an employee’s terms of employment can be appropriately implemented, as long as this reasonable notice of the changes has been provided. The required length of reasonable notice is outlined by employment law under the Employment Standards Code and Canada’s common law, and is equal to that of the reasonable notice required in cases of termination without cause. As a result, the reasonable notice period required for changing an employee’s conditions will vary for every case depending on the employee’s years of service, position and age. 

Constructive dismissal only occurs when changes have been unilaterally made by an employer. Therefore, when an employee consents to the changes, they thereby waive their right to claim constructive dismissal. Further, it is important for employers to document when an employee has provided informed consent, for situations when employees challenge the changes. To properly obtain informed consent from employees, employers must demonstrate they have completed two steps. 

  1. An employer must provide the proposed changes in writing, and give an employee adequate opportunity to consider the changes. This period should be longer than one week. 
  2. The employer must receive a signed acknowledgment from the employee indicating that they understand, accept and agree to be bound to the proposed changes, having had a reasonable opportunity to consider their options. 

Employee responsibilities

An employee cannot claim constructive dismissal if, for a period of time, they act in accordance with the changes made to their employment. This is considered implied acceptance/acquiescence and may provide a basis for believing that the employee is in agreement with the unilateral changes. As such, it is recommended that an employee seek legal advice immediately if they believe their employer has unilaterally changed the fundamental terms of their contract. Additionally, it is not recommended that an employee resign without first obtaining confirmation that they are eligible to claim constructive dismissal. Upon confirmation, when an employee does resign, they must make it clear to the employer that the resignation is due to the substantial change or incidents, and cannot withhold this information from the employer. 

In circumstances of constructive dismissal, employees also have a duty to mitigate damages. This means that employees may not be able to recover damages if they fail to take reasonable steps to mitigate avoidable economic losses. These duties take many forms and range from the employee’s obligation to look for comparable work, or returning to work for the former employer during the period of working notice. In most cases, the employee may not be required to return or continue to work for the employer who constructively dismissed them.  With that said, circumstances where an employee would be expected to return to work to mitigate damages include: when the former employer offers temporary, comparable employment, there are no conditions that may make such a return unreasonable or intolerable, and a reasonable person would accept such an opportunity. 

What the courts will consider

The courts will mainly consider the nature of the relationship prior to the change that has been unilaterally imposed on the employee. They will then look at what the changes have done to the employment relationship between the employee and the employer. The question is if the changes that have been made to the employment relationship are so significant that it amounts to a breach of a fundamental term and condition of the employment contract. It is important to note that when looking at the terms of the contract, the court will consider implied, written, or verbal contract realities. This means that the court does not only look at explicitly written agreements, but may also consider other types of agreements between an employee and employer. 

Ultimately, to determine if a unilateral change by an employer gives rise to a constructive dismissal, the court will ask: 

  1. What are the terms of the employment contract? 
  2. Has there been a breach of one, or more of those terms? 
  3. If there has been a breach, is it a fundamental breach? 

Depending on the answers to the above questions, the court will determine whether or not an employee was constructively dismissed. If it is found that an employee was constructively dismissed, the employee will be entitled to an award on the basis of constructive dismissal. The award will be evaluated in like manner to that of a wrongful termination case. 

Conclusion

In some cases, there may come a time in an employment relationship where an employer wishes to change the conditions of an employee’s job. This may be due to a variety of different reasons, but in these circumstances, the employer must follow the appropriate avenues to avoid constructive dismissal including providing reasonable notice, and obtaining informed consent. If an employer fails to do this, or by their actions or lack thereof has created a work environment that makes it unreasonable for an employee to continue, you may be eligible for constructive dismissal damages. Contact Osuji & Smith Lawyers today for assistance with your constructive dismissal lawsuit. 

Need More Support?

Unemployment can be a very stressful and trying time. If you or any of your family members need support in coping with your unemployment, the Calgary Counselling Centre may be able to help. 

  • Calgary Counselling Centre

If you have recently become unemployed and require financial support, you may qualify for assistance with basic living expenses and some benefits through Alberta Works.

  • Alberta Works

Written by: Jillian Cowan and Marie Beaupre-Olsen

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