When we meet with employers regarding a needed change or a tough new situation at work, we often find that mention of constructive dismissal can really catch employers off guard. When it comes to constructive dismissal, there’s no termination meeting or official decision by the employer, but the law can still treat the situation as if the employee was fired. Substantial changes to a job, or a work environment that becomes so bad, the employee feels they have no reasonable choice but to leave, can trigger a constructive dismissal. Ultimately, constructive dismissal creates the same obligations for the employer as a termination, including paying termination pay, severance, and possibly damages to the employee.
In this blog, we’ll review the two main ways that constructive dismissal can happen:
Changes to the Terms of the Job:
Employees are generally entitled to rely on the established terms and conditions of their role. Terms and conditions of a role are typically outlined in an employment contract, but may also be established through an employee’s day-to-day working conditions. If an employer unilaterally changes those terms in a substantial way, the law may view that as if the employer simply outright terminated the employee.
Substantial changes that could trigger constructive dismissal claims include:
- Reducing pay, commissions, or benefits;
- Demoting the employee or stripping away core duties;
- Shifting hours or schedule drastically after years of a consistent pattern.
Even when there are legitimate business reasons, employers shouldn’t assume that they can just impose these sorts of changes. Instead, when you realize a change is needed, we suggest you consult with your legal counsel for strategies on how these changes could be implemented. It’s not all bad news; there may be ways to make necessary changes (generally with plenty of notice), so ideally, the sooner you consult, the better. Without careful legal and strategic planning, an employee could argue that they have been constructively dismissed.
A Toxic or Harassing Workplace
The second way a constructive dismissal could happen is when the environment becomes so toxic that a reasonable person wouldn’t feel they could stay. This can result from harassment, bullying, discrimination, or management behaviour that crosses the line.
This can include:
- Harassment or bullying by coworkers or management;
- Discriminatory treatment or failure to accommodate under the Human Rights Code;
- A culture of public criticism, humiliation, or exclusion;
- The employer is ignoring complaints or failing to investigate properly.
Employers have legal duties under the Occupational Health and Safety Act and the Human Rights Code to keep workplaces safe and harassment-free. Failing to act on toxic behaviour can lead to a constructive dismissal claim.
How Employers Can Reduce the Risk of Constructive Dismissal
Here are some tips that could reduce the risk of receiving a constructive dismissal claim:
- Plan ahead and consider requesting employee consent for any major changes, and/or providing proper notice before implementing changes;
- Use well-drafted employment contracts that allow for some flexibility;
- Have a clear harassment policy, and investigate all complaints promptly;
- Document your decisions and communications so there’s a clear record if things escalate.
Constructive dismissal claims can be complex and expensive. We highly recommend reaching out before making any substantial changes or in situations where employees may be experiencing harassment or a toxic workplace for strategic and legal advice.
