Deconstructing Constructive Dismissal

Constructive dismissal can be complicated. Just what is it? And what can you do if you find yourself in a constructive dismissal situation? Let’s take a closer look:

What is Constructive Dismissal?

It is a situation in which your employer does not directly terminate you, but unilaterally changes significant parts of your job. For example:

  • Your employer may remove your supervisory responsibility (i.e. you are demoted and the people who used to report to you are now peers).
  • You lose a job title.
  • Specific tasks that were a meaningful part of your work are removed.
  • There is a substantial reduction in remuneration. “Substantial” is typically considered as a 15-20% decrease in pay and/or more important forms of compensation are removed (e.g. you are no longer entitled to a bonus).
  • The location in which you work has changed significantly. Say, for instance, you have always worked in Waterloo. Your business has been sold and the head office is now in Toronto. If the change requires you to move or spend an unreasonable amount of time commuting, it may meet the standard for constructive dismissal.

There are also situations in which there are no communicated alterations to the terms and conditions of employment but the manner in which you’re treated has changed.

A classic example: you have a new boss, and this person doesn’t like you. They want a new person in your role but they don’t want the expense of terminating your employment. Instead, they devise a strategy that will make your work life increasingly difficult. They’re hoping you’ll get to the breaking point and quit so no severance has to be offered.

As an example: you may notice you’re not invited to meetings anymore, or that your boss is micromanaging and finding fault with every aspect of your performance.

When this type of behaviour moves beyond interpersonal conflicts, it can make continued employment impossible.

Legal Entitlements

In any employment relationship, there is a spectrum of legal entitlements for employees. At one end, if an employer makes the decision to terminate employment, it automatically triggers certain protections. You are covered by minimum statutory entitlements under the Employment Standards Act, as well as common law entitlement to reasonable notice or payment in lieu of notice.

On the other end of that spectrum, if you voluntarily resign or quit, you are not entitled to any legal protections.

Constructive dismissal falls in the middle. Your employer hasn’t terminated the employment relationship but their actions demonstrate that they don’t want it to continue. You’re then in a state of limbo. It is difficult to work in that environment, and many people just quit. As a result, though, they lose severance, legal protections, and prejudice their ability to collect employment insurance benefits.

Know Your Options Before You Quit

Do you have a strong constructive dismissal case? Is there a better way to arrive at an agreement with your employer that offers some sort of severance? If you find yourself in a situation like those mentioned above, it is important to seek legal help and understand your options before quitting.

The reality is that your employer is in the driver’s seat when it comes to constructive dismissal claims. If you quit, they owe you nothing and it becomes your financial responsibility to pursue a legal remedy. These cases are complicated but there are solutions.

Again, if you find yourself in a difficult employment situation, consult with an experienced employment lawyer before you make a decision to quit. Every employment relationship is unique and an employment lawyer will arm you with the most accurate information and the best possible options for your specific case.

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About Melanie Reist

Melanie Reist has over 30 years of employment law expertise.

With her strong employment law background, Melanie is also an effective mediator who can assist parties in resolving workplace conflicts as well as disputes which have gone to litigation.

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