Did you know it is possible to be fired without really being fired?! It’s true. This situation is referred to as constructive dismissal. Traditionally when an employee is wrongfully dismissed, the employer has actually fired the employee without cause and without providing reasonable notice.
In the case of constructive dismissal however, the terms of employment have been substantially and unilaterally changed by the employer such that the employee can consider himself or herself dismissed. The employee can then leave the employment and seek damages.
There are a variety of changes that an employer may make that could (but will not always) result in a constructive dismissal, including:
o Reduction or change in responsibilities.
o Reduction in salary or benefits.
o Changes in working conditions.
While this area of the law may sound straightforward it can in fact be fraught with danger. If an employee does not act quickly enough, he or she may be considered to have accepted the changes. On the other hand, if an employee acts too quickly, he or she may be considered to have resigned.
Determining whether a constructive dismissal has occurred depends very much on the facts of each individual situation. Consider the following examples and decide if you think the court found that the employee was constructively dismissed.
1. The employer changed its bonus structure from a bonus with no cap to a fixed bonus.
Yes. By imposing a cap, the employer had attempted to limit the employee’s participation in the company’s growth.
2. The employee earned $95,000 as V-P of Leasing and Franchising. He was unable to meet his targets. Following a restructuring, the employee was offered the new position of V-P of Leasing with a base salary of $85,000.
No. The employee had been having difficulty meeting the requirements of his original position and therefore it would have been reasonable for him to assume a new role.
3. For economic reasons the employer moved its operations from Ontario to Quebec. Despite the offer to pay all moving expenses, the employee refused to relocate.
No. The employer’s decision was not unreasonable. An employee is not entitled to a job for life in a place of his choosing.
4. Following a corporate restructuring the employee was demoted from his position as V-P. Although his salary remained the same, his responsibilities were significantly reduced.
Yes. This was a case of constructive dismissal even though the restructuring was undertaken in good faith and for valid business reasons.
5. The employee who had been President and CEO of the employer was demoted to V-P of Finance and Administration. His salary remained the same.
Yes. As a result of the change, the employee had no real managerial responsibility and the change represented a significant demotion.
6. Following a restructuring, the employee, a senior engineer, was demoted. Although he had been considered for a new managerial position he indicated that he was not interested.
No. The employee was deemed to have accepted the change when he refused to be considered for the new position.
7. When the employee was hired he indicated that he would not work shifts for health reasons. When the employer decided to make shift work compulsory the employee quit.
Yes. Not working shifts was a clear term of the employee’s contract.
8. The employee was asked to report to a former subordinate.
Yes. Having to report to a former subordinate amounted to a loss of prestige and status for the employee.
In addition to making an informed decision about whether a particular set of circumstances can be considered constructive dismissal, employees also need to be aware that they have a duty to mitigate their damages. This duty to mitigate may involve accepting the new position. Before making what could be a life altering decision you should seek legal advice.
If you are an employer considering a reorganization or significantly altering an employee’s job, you will minimize your risks by seeking legal advice.Share