A constructive dismissal arises in the employment context when an employer alters a fundamental term of the employment contract, which can be treated as a breach of contract by the employee. Instead of continuing to work under a new employment arrangement, the employee can choose to resign from their employment following a fundamental change so as not to condone the change. As a result, the resignation will be viewed as involuntary, and, in effect, a termination. Importantly, if an employee resigns from their employment, and is unable to successfully argue constructive dismissal, they will not be entitled to a termination package and will be found to have voluntarily resigned from their employment.
An employer found to have constructively dismissed an employee is liable to pay the employee a severance package.
In order to successfully argue that you have a case for constructive dismissal, the change to the employment relationship has to go to the heart or be fundamental to the employment relationship. Employers have the right to institute reasonable changes to the terms of employment (i.e., changing some job duties) in response to the realities of business, without such change being considered a constructive dismissal.
The most common types of constructive dismissal cases are as follows:
- significantly reducing the employee’s compensation;
- demoting the employee;
- requiring the employee to move to a different geographic location;
- requiring the employee to work in a poisoned work environment (i.e. an environment where the employee faces harassment); or
- laying off the employee. An employer does not have an automatic right to lay off a non-unionized employee unless the right to layoff is provided for in the employee’s employment contract.
If you think you have been constructively dismissed from your employment for any of the above reasons, please contact an employment lawyer to determine your best next steps to ensure that you secure a full severance package.