What is Constructive Dismissal?

Generally, if an employee voluntarily quits their employment they are typically not entitled to severance or termination pay from their employer. However, there is an exception to this general rule in employment law known as “constructive dismissal.” Constructive dismissal occurs when an employee quits their job due to the unilateral and fundamental changes made by their employer, effectively ending the employment contract.

In cases of constructive dismissal, the employer did not directly fire the employee, but the substantial changes to the job rendered the employment contract at an end. This distinction is significant because, unlike the situation where the employee voluntarily quits their job, if the employee is constructively  dismissed  they would be entitled to the same notice period or compensation in lieu of notice as they would be in the case of wrongful dismissal and a without cause termination of their employment.

The concept of constructive dismissal recognizes the inherent power imbalance in the employer-employee relationship. Without this concept, employers could effectively force employees to quit, thereby avoiding the obligation to provide reasonable notice or compensation in lieu of notice if the employee was terminated without cause.

Examples of Constructive Dismissal

Certain fundamental changes to the conditions of employment may be classified as constructive dismissal. Examples include a significant reduction in pay, a decrease in working hours, a demotion, a substantial increase of workload, a change in duties and responsibilities, or a requirement for the employee to relocate to another city (provided relocation was not part of the original employment contract). Minor incidental changes to the job are generally insufficient to support a claim of constructive dismissal.

A toxic or hostile work environment and harassment can also form grounds for constructive dismissal, particularly if the employee has brought their concerns to the employer who has ignored or failed to properly address the issues in the workplace. 

It is Important that Employees Do not Accept the Change

It is important to note that the burden of proof lies with the employee to establish that they have been constructively dismissed. The employee must demonstrate that the employer implemented a fundamental change unilaterally and that the employee did not condone or consent to the change. If an employer implements a fundamental change, it is important for the employee to speak up and object to the change. An employee’s silence when faced with a fundamental change may be looked at by the Courts as the employee consenting to or condoning the change. 

Before Making a Decision to Quit – Seek Legal Advice

Making informed decisions about your employment is crucial, especially when considering resignation. Many employees may not recognize that they have been subject to constructive dismissal and hastily choose to resign. It is essential to understand the potential risks involved. If you resign prematurely from your employment without being able to establish a successful claim of constructive dismissal, you may not be entitled to any compensation, including severance,  from your former employer. 

It is imperative to consult an experienced employment lawyer who can carefully analyze your situation and determine if your working conditions have undergone significant changes and to protect your legal rights and entitlements.