To the surprise of many employees and employers, an employer can fire an employee without actually telling the employee that they are “fired”.
By: Dan W. Melnick, lawyer at Cook Roberts LLP.
What is Constructive Dismissal?
Constructive dismissal is a form of wrongful termination for which an employee may be entitled to damages and compensation. Unlike a typical wrongful termination situation, in constructive dismissal the employer has not expressly told the employee that they are “firing” them.
Indeed, in many constructive dismissal cases, the employee does not realize that they have been constructively dismissed, and is either still working for the employer, or chooses to resign without later seeking the compensation that they could claim.
When does Constructive Dismissal Occur?
In every employment relationship there is either a verbal or written employment contract between the employer and the employee. When an employer or employee ends the employment relationship, they are essentially breaching the employment contract. An employer can also breach the employment contract if they constructively dismiss an employee.
Legally, constructive dismissal arises in two situations:
1. Where an employer, without the input or consent of the employee, substantially alters an important or essential term of the employment contract and as a result breaches the employment contract; or,
2. Where an employer creates a work environment that is intolerable and which no reasonable person should be subjected to.
In either case, the employee must show that a reasonable person in the circumstances of the employee would have reached the conclusion that the employer no longer intended to honour the particular terms of the employment contract with the employee.
Examples of Constructive Dismissal
A claim for constructive dismissal may arise where an employer has made one or more of the following changes to an employee’s employment contract:
• the employer has changed the employee’s compensation or compensation structure;[1]
• the employer has changed the employee’s job title or position within the workplace;[2]
• the employer has taken away important or essential job duties of an employee; or,
• the employer has forced additional job duties onto an employee without compensating the employee for those additional duties.
A claim for constructive dismissal that is based on an intolerable work environment can arise when an employer has subjected an employee to unfair, improper, or otherwise intolerable treatment such as:
• belittling or berating an employee;
• discriminating against an employee contrary to the British Columbia Human Rights Code, RSBC 1996 c 210;
• routinely undermining an employee or setting them up to fail; or,
• deliberately excluding or ostracising an employee.
Damages
Where an employee has been constructively dismissed, they are entitled to damages in lieu of the reasonable “notice” that their employment was ending and which their employer should have provided to the employee (the “notice period”).
Damages consist of the employee’s regular pay, and may include damages for loss of bonuses, vacation pay, pension benefits, share options rights, and other benefits that the employee should have received during the notice period.
The notice period that an individual is entitled to can range from 0 – 24 months depending on factors such as the length of their employment with the employer, their employment position, and their age.
In addition to the notice period damages, if an employer has subjected an employee to an intolerable work environment and has caused the employee to suffer mental distress as a result, then an employee may be entitled to an award of aggravated or punitive damages.
If an employee left their employment because they were discriminated against contrary to the Human Rights Code, then that employee may be entitled to damages for injury to their dignity, feelings, and self-respect in proceedings brought under the Human Rights Code as an alternative or in addition to a constructive dismissal claim in the courts.
What should an Employee do?
If an employer is making unilateral and unwelcome changes to an employee’s pay structure (lower pay), job duties, or work environment, it is critical that the employee voice their opposition to the changes.
If an employee does not protest the changes and allows a reasonable period of time to pass after being notified of the changes, they may be deemed to have consented to the changes and a constructive dismissal claim will be unsuccessful.[3]
At the same time it can be critical that the protest is done in a respectful manner. It is also important that the employee not protest every minor change to their employment or workplace. Protests done in a disrespectful manner, or repeatedly protesting minor changes, can have negative legal and practical consequences for an employee.
Further, if an employee sues for or takes the position that they have been constructively dismissed, this will typically end the employment relationship, regardless of whether the employee has actually resigned.
To that end, it is important that an employee seeks legal advice regarding whether and how to protest changes in their workplace or employment, and whether they should sue for or take the position that they have been constructively dismissed. Cook Roberts LLP’s lawyers have extensive experience in advising employees on such matters.
What should an employer do?
Not every change to an individual’s employment will amount to constructive dismissal. To the contrary, employers have the right to make necessary changes to the workplace for financial or operational reasons, so long as those changes do not amount to a breach of the employee’s employment contract (whether that contract is a written or verbal one).
In order to avoid claims of constructive dismissal, an employer should be careful to balance an employee’s legitimate rights and expectations with the employer’s right to make changes to the workplace.
Our lawyers represent employers on a regular and ongoing basis, and have extensive experience advising employers how to avoid constructive dismissal situations, and how to minimize the chances of a successful constructive dismissal claim being brought against an employer.
Is there a Constructive Dismissal issue at your Workplace?
If you need help with an employment dispute, please contact one of Cook Roberts LLP’s Employment Lawyers. Together, the lawyers at Cook Roberts LLP have over 65 years of experience in advising individuals in employment-related legal matters.
COOK ROBERTS LLP
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[1] Pavlis v HSBC Bank Canada, 2009 BCSC 498
[2] Younger v Canadian National Railway, 2014 BCSC 1258
[3] Potter v New Brunswick Legal Aid Services Commission, 2015 SCC 10; Garner v the Bank of Nova Scotia, 2015 NCSC 122; Wronko v Western Inventory Service Ltd., 2008 ONCA 327.
