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The Law of Constructive Dismissal
Constructive dismissal is the term used when an employer imposes a fundamental change to an employee’s job. This change must be considered a substantial departure from the employee’s previous job, such as a change affecting the employee’s responsibilities, status, geographical location, or compensation. (See, for example, the Supreme Court’s decision in Farber v. Royal Trust Co.).
Intolerable working conditions stemming from harassment, sexual harassment, discrimination or bullying may also be considered a constructive dismissal, since it is a term of the employment contract that employees be treated with decency, civility and dignity.
As an example, if an employee is hired to be a chef, the employee may claim constructive dismissal if the employer forbids the chef to cook and requests the chef to take orders instead. However, if the change is not fundamentally related to the employment contract or if it is not objective or clear, a constructive dismissal claim can be risky. In failed claims, the employee will be deemed as having effectively resigned, in which case he or she is not entitled to any compensation at all. An example of a failed constructive dismissal claim can be read here.
It is important to note that if the employee accepts a change and continues working, the employee forfeits his or her right to claim damages for constructive dismissal. This principle is called “condonation.” Therefore, it is important to object to a relevant change in a timely manner.
Oftentimes, the employer’s decision to change certain aspects of the employment contract is considered to be bad faith conduct by both the employee and the courts. Despite evidence of dishonest or bad faith conduct, it is not a necessary requirement to prove a claim of constructive dismissal. Instead, the court will assess all of the circumstances surrounding the changes, including the relationship between the employer and the employee, the length of employment, the manner in which the change was effected, as well as, any bad faith conduct.
For employees who believe they may have been constructive dismissed, it is important to meet with an employment lawyer as soon as possible to assess the merits of your case, the legal steps you should take and the potential damages that you may be entitled to.