What is Constructive Dismissal?
Employers do not always fire employees directly. Rather, they sometimes make significant changes to the terms of an employment contract or create a work environment so toxic or hostile that an employee is compelled to resign. This may constitute constructive dismissal.
Not all changes to employment amount to constructive dismissal. The change(s) to the terms of employment must be significant and the employee cannot have consented to the change. An employee should make it known to their employer that they refuse to accept the change. It is best to do this in writing.
Signs of Constructive Dismissal
It can be challenging to recognize whether you have been constructively dismissed. Evidence of constructive dismissal may include the following:
- Reduced compensation
- Substantial increase in workload
- Demotion
- Change in work hours or shift
- Refusal to accommodate an employee’s disability
- New work location
- Toxic or hostile work environment
Right to Compensation as a Result of Constructive Dismissal
The amount of compensation that may be available to employees who prove that they have been constructively dismissed is based on two sources of law: the Employment Standards Act (ESA) and the common law.
1) The Employment Standards Act
Under the Employment Standards Act, employees who have been continuously employed for at least three months are entitled to notice (or payment in lieu) equal to one week per year of tenure or a partial year of service up to a maximum of eight weeks’ pay. Where payment is made in lieu of working notice, this is frequently referred to as “termination pay”.
An employee may also be entitled to severance pay up to a maximum of 26 weeks if the employee has worked for their employer for at least five years, their employment is severed, and:
- their employer:
o has a global payroll of at least $2.5 million; or
o severed the employment of 50 or more employees in a six-month period because all or part of the business permanently closed.
Where an employee qualifies for severance pay, the specific amount is calculated by multiplying the employee’s standard wages for a regular work week by:
- the number of years of employment and,
- the number of months of employment divided by 12 for a year that is not completed.
2) Common Law
The notice periods set out in the ESA represent an employee’s minimum entitlements. Employees are often entitled to greater amounts under common law, unless they have contracted out of those rights in an enforceable employment contract. In the seminal case of Bardal v. Globe & Mail Ltd., the Court set out a list of factors to be considered when calculating reasonable notice, which include the following:
- the character of employment;
- the length of service;
- the age of the employee; and
- the availability of similar employment, having regard to the experience, training, and qualifications of the employee.
It is important to note that employees have a duty to mitigate their damages. The duty to mitigate requires an employee who has been constructively dismissed to take all reasonable steps to find comparable alternative employment. If the employee finds comparable employment during the common law notice period, the earnings from the new job may be deducted from the amount owed for common law notice. The duty to mitigate does not apply to the minimums set out in the ESA.
Calculating common law notice is complex and done on a case-by-case basis. You should consult with an employment lawyer to obtain an opinion of what you may be entitled to.
Pursuing a Claim for Constructive Dismissal
To establish constructive dismissal, an employee must prove that their employer unilaterally made significant changes to the employment or that the employer’s ongoing conduct demonstrated an intention to no longer be bound by the prevailing terms of employment. Therefore, the employee must have evidence to prove their claim. Amongst other things, this might include an employment contract, communication records, notes, witness testimony, performance reviews, disciplinary records, pay records, and medical records.
At Northern Law LLP, we regularly assist employees with constructive dismissal matters. We are not intimidated by large employers – we have advanced cases against many of the largest employers in Canada. If you think that you may have been constructively dismissed, call us today at 705-222-0111 or send an email to info@northernlaw.ca.