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What is Constructive Dismissal?

The termination of a job can take many different forms, not just that of a dismissal. For example, when your employer’s conduct displays the intention to no longer be bound by your contract of employment, you as employee then have a choice. You can either accept conduct or changes made by your employer, or treat the conduct or changes as a repudiation of your contract, and sue for constructive dismissal. Since you have not been formally terminated, the employer’s act or conduct is referred to as a constructive dismissal. A constructive dismissal is a legal construct with the employer?s act or conduct being treated as a dismissal because of the way it is characterized by the law.

How does Constructive Dismissal Occur?

It has been recognized that a constructive dismissal can occur in one of two ways. It can occur through a single unilateral act that breaches an essential term of your contract of employment. It can also occur when your employer’s conduct demonstrates that it no longer intended to be bound by the contract. In either case the employer’s perceived intention to not be bound by the contract is taken to give rise to a breach. In either case the employer needs to commit a fundamental breach, or a sufficiently serious breach of your employment contract, that you as the employee have the onus of proving.

How do I prove that my employer has changed my employment contract?

Firstly, a court needs to identify whether or not an express (written) or implied term in your employment contract has been breached. This needs to be assessed from an objective viewpoint. If such a breach of your contract has been found to exist, the inquiry then focusses on whether the breach was sufficiently serious to constitute your constructive dismissal. What does this mean? To constitute a constructive dismissal the employer’s unilateral change must be found to substantially alter an essential term of the contract of employment – in other words, be pretty serious. A minor breach which cannot be perceived as substantially changing the essential terms of your contract will not constitute a constructive dismissal.

If it is objectively established that a breach has occurred, the second step of the analysis requires the determination as to whether at the time the breach occurred a reasonable person in the same situation as you would have felt that the essential terms of the employment contract were being substantially changed. Constructive dismissals under this approach consist of conduct, when viewed in light of all the circumstances, would lead a reasonable person to conclude your employer no longer intended to be bound by the terms of your employment contract. The test in the seminal case in re Rubel Bronze is still the law in Canada. The focus is whether a course of conduct pursued by your employer evince[s] an intention to no longer be bound by the contract.

Do I have the right to leave my job if I believe that I have been constructively dismissed?

Yes, you do. You have a right but not an obligation to treat the employment contract as being at an end when the employer commits a present or anticipatory breach of a fundamental term of the contract.? If an employee does not take steps to reject or oppose a change to the employment relationship, the employee will be deemed to condone it and will lose his or her right to later claim a constructive dismissal

What type of changes will constitute constructive dimissal?

Demotion – a significant demotion has long been recognized as a constructive dismissal in Canada. A demotion causing lower prestige and status, even without any immediate change in salary, may constitute a constructive dismissal. Also, perceived and actual loss of leadership within a company can constitute a constructive dismissal. But remember, even a substantial change in your duties may not constitute a constructive dismissal unless the change amounts to a breach of a fundamental term of your contract of employment.

Change in Reporting – A change in reporting status may or may not be sufficient to constitute a constructive dismissal, depending upon the nature of your employment relationship. In certain instances, a downward change in reporting functions can be classified as a constructive dismissal. However, being required to report to someone who was one?s junior after this individual is promoted into a superior position does not in itself create a constructive dismissal, even if you’ve found the promotion of this individual humiliating.? The change must amount to a breach of a fundamental term of your contract of employment.

Promised Promotion – Failure to provide a promised promotion to an employee may constitute a constructive dismissal.

Changes in your Responsibilities – A court would need to ascertain whether in all the circumstances a change in responsibilities and duties unilaterally made by your employer amounts to a breach of a fundamental term of the contract of employment. An employer cannot unilaterally remove you from a position and require you to perform a fundamentally different type of work or the position being no longer consistent with the terms and conditions under which you agreed to work. Also, the systematic removal of the important functions of an employee will be regarded as a constructive dismissal.

Change in Sales Territory – your employer could repudiate your contract of employment by a change which is unreasonably prejudicial to your, as commissioned employee’s earning potential.

Change in Working Hours – The hours of work may be a fundamental term of the contract of employment. A unilateral change in your hours of work may, either independently or along with other changes, constitute a breach of the employment agreement. For example, in one case an employer attempted to put an employee hired for day work onto night shift, the court found that the employee was constructively dismissed and that he had no obligation to mitigate his losses by working in the new position.

Decrease in working hours – the unilateral reduction in the number of hours or days that you are required or permitted to work can constitute a constructive dismissal.

Increase in working hours – although rarely seen, an increase in working hours may constitute constructive dismissal.

Changes in your work conditions – changes in your work conditions, if combined with additional factors, can create a constructive dismissal. For example, in one case, the placing of an employee in an unheated shed that had only been used for part-time employees and was away from easy access to management was considered a fundamental change, hence a constructive dismissal.

Change in location or forced transfers – this is probably the most litigated constructive dismissal claim. For a contract to be considered repudiated, the change in location must be substantial. Courts have noted that an employee may not being required to transfer if such a transfer would cause undue hardship to the employee. Courts will normally look at the employees personal situation objectively in making its determination. In addition, courts will normally look to see if you have been provided with an equivalent position at the new location, offered the same salary or an increase in salary, if you will lose anything from the cost of the transfer if you have to move, whether or not you understood that you might be transferred at the time you are hired, whether or not your employer has a practice of transferring employees and whether your employer is acting in good faith. Unfortunately, other courts have decided that an employee’s personal status should be disregarded when deciding whether or not the employer has repudiated your contract by asking you to change locations.

Reduction in hours of work – if your employer cuts your hours, the reduction can amount to a constructive dismissal if you suffer significant income loss. In addition, the reduction of a position of salary, two part-time hourly can also constitute constructive dismissal.

Abusive or inappropriate treatment by your employer – abusive behaviour by your employer will almost always constitute constructive dismissal, so long as the abusive behaviour makes working conditions intolerable. Courts have found in the past that an implied term of any employment contract is that your employer will treat you with civility, decency, respect and dignity. Some examples of abusive behaviour which can engender constructive dismissal are if your employer is regularly being verbally abusive towards you, shouts and swears at you, frequently threatens termination, uses foul language in a disrespecting matter or if your employer inappropriately calls into question your loyalty, honesty, and integrity.

Abusive or inappropriate treatment by your co-workers – Your employer has a duty to see that the work atmosphere is conducive to the well being of its employees and its failure to prevent the harassment of an employee by co-employees is an obvious breach of this duty that may amount to a constructive dismissal. Given that the employer has a common law duty to provide a safe system of work, it is not surprising that the common law has evolved to require the employer to prevent abuse and inappropriate conduct of co-workers particularly in such situations of racist and sexual behavior.

Poison work environment – courts have held that workplaces that are poisoned work environments can be deemed to have repudiated employment contracts hence allowing a claim for constructive dismissal – however, only where serious wrongful behaviour is demonstrated. Remember, you bear the onus of claiming that you have been constructively dismissed because of your poisoned work environment. The test is an objective one and what you feel or believe is generally insufficient. The evidence must support that the work environment was poisoned. There must be evidence of an objective reasonable bystander that would support the conclusion of the poisoned work environment.

If your employer breaches human rights legislation in the workplace – A poisoned work environment because of a breach of human rights legislation may constitute a constructive dismissal in appropriate circumstances. However, a contextual approach must be used. The nature of the breach, the number of instances of inappropriate conduct, the person committing the breach and the length of the employment relationship are variables the court can consider.

Lay-offs While lay-offs are common in the collective bargaining regime, the common law, through the case of Elsegood v. Cambridge Spring Service (2001) Ltd. 2011 ONCA 831, has traditionally not allowed employers to lay off employees for economic or disciplinary reasons. A lay-off will normally be considered by the court to be a constructive dismissal since it evidences the employer’s intention not to be bound by the contract of employment and, as noted above, economic redundancy is not cause at common law for the employer to unilaterally modify the contract of employment. However, O. Reg. 228/20 prohibits employees from launching a complaint under the ESA about having been constructively dismissed.

Do you believe that you have been constructively dismissed? If so, call our Hamilton employment lawyers today. We serve employees province-wide.

Remember, the onus of proving constructive dismissal is on you. You need to prove on a balance of probabilities that your former employer unilaterally breached the employment contract, and that the breach provides for a substantial change to the root of your employment contract. It’s very difficult to do this on your own. It’s best that you hire a Hamilton employment lawyer to assist and guide you through the employment law process. Contact us today by filling out a contact form. We will be happy to discuss your case with you – and remember, all our consultations are free.

 

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Common Questions about Constructive Dismissal

It is an implied term in a contract of employment that the employer will not make a substantial change in the duties and status of the employee so as to constitute a fundamental breach of contract.? A minor change may give rise to damages but is not a constructive dismissal since the contract continues to exist. Accordingly, it does not give the employee the right to resign and sue as if there had been a discharg?

In the absence of cause, any fundamental or serious breach by an employer of a major term of the employment relationship or employment agreement allows the employee to take the position that a constructive dismissal has occurred. Even if the employer has never formally terminated the employee, there can be a dismissal at law. However, it must be a srerious, not just a minor or incidental term of the employment relationship which is breached in order for a constructive dismissal to exist.

 

Whether a change in the term of employment gives rise to a constructive dismissal depends on the nature and degree of the breach, the intention of the parties and the prevailing circumstances. Remember, for constructive dismissal to have occurred, there must be a fundamental breach of term of employment. In each case, it is a question of what are the terms of the contract, whether there has been a breach, and, if there has been a breach, whether it amounts to a fundamental breach. In other words, the breach must be a change that goes to the ?root of the employment contract.

The breach must be fundamental in order for constructive dismissal to exist.

To reach the conclusion that you have been constructively dismissed, a court must determine whether the unilateral changes imposed by the employer substantially altered the essential terms of your employment contract.

In doing so, the court will ask whether the unilateral change by your employer constituted a breach of your employment contract and secondly, substantially altered and essential term of your contract. The question that is asked next is whether your employer engaged in a course of conduct that, when viewed in light of all the circumstances, would lead a reasonable person to conclude that your employer no longer intended to be bound by the terms of your employment agreement.

Yes, if you decide to treat the breach of your employment contract as a constructive dismissal, you must communicate that decision to accept the repudiation of the contract to the employer in a reasonable time.

In most cases, when an employee voluntarily resigns from his or her employment, rather than being dismissed, the employee cannot claim wrongful dismissal damages. Courts will not award damages unless it is convinced that the employee resigned as a result of the constructive dismissal. In other words, you must advise your employer that you are not prepared to accept the change in either attempt to have your employer reconsider the change or negotiate an appropriate alternative.

It has been found that if the employer changes the terms of the employment relationship on a short-term basis or on a basis where it is implied the change will not last indefinitely, the other party can insist on reverting to the original relationship. Courts have found constructive dismissal for example, where an employee’s demotion and salary was reduced but was only to be reduced temporarily.

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