Constructive dismissal is a situation where an employee resigns from their job due to a significant change in their employment conditions, which makes it difficult or impossible for them to continue working.
In Canada, the law recognizes constructive dismissal as a form of wrongful dismissal, and it can result in significant financial liability for employers. In this article, we will discuss how a Canadian court might find that a worker has been constructively dismissed, the risks to employers, and provide information for HR professionals on how to avoid issues.
Understanding Constructive Dismissal
Constructive dismissal occurs when an employer makes significant changes to an employee’s employment conditions, without the employee’s agreement, which result in a fundamental breach of the employment contract. Examples of changes that may be considered constructive dismissal include demotions, pay cuts, changes to work hours, or a significant increase in workload. In these situations, an employee may feel that they have no choice but to resign from their position, resulting in a claim for constructive dismissal.
Proving Constructive Dismissal
To prove constructive dismissal, an employee must show that the changes to their employment conditions were substantial and that they resulted in a fundamental breach of the employment contract. The employee must also show that they did not agree to the changes and that the employer did not have a valid reason for making them. Finally, the employee must show that they resigned because of the changes and that they did not wait too long to resign, as this may be seen as an acceptance of the changes.
Risks to Employers
The risks to employers of a finding of constructive dismissal are significant. An employer may be liable for damages, including unpaid wages, severance pay, and compensation for any harm suffered by the employee as a result of the constructive dismissal. The employer may also face legal costs and damage to their reputation.
Avoiding Constructive Dismissal Claims
To avoid constructive dismissal claims, employers should take a proactive approach to managing their employment relationships. Some key steps include:
- Clearly defining the terms of employment
Employers should ensure that their employment contracts are clear and comprehensive. This should include a description of the job duties, pay and benefits, and any conditions that may lead to termination.
- Communicating changes to employees
Employers should communicate any changes to employment conditions to their employees in a clear and timely manner. This may involve consulting with employees before making changes, providing reasonable notice of the changes, and explaining the reasons for the changes.
- Providing options to employees
Employers should provide employees with options when making significant changes to employment conditions. This may include offering alternative job duties or working arrangements, providing training or support to help employees adjust to the changes, or offering a severance package.
- Addressing concerns promptly
Employers should address any concerns raised by employees about changes to their employment conditions promptly and respectfully. This may involve engaging in dialogue with employees to understand their concerns, providing reasonable accommodations where possible, and seeking input from HR professionals or legal counsel as needed.
Constructive dismissal is a serious issue for employers, and it is important that HR professionals take steps to prevent it from happening. By clearly defining employment terms, communicating changes to employees, providing options, and addressing concerns promptly, employers can reduce the risk of constructive dismissal claims.
Employers should also seek legal advice when making significant changes to employment conditions, to ensure that they are in compliance with relevant employment laws and regulations.
By taking these steps, employers can create a positive work environment that supports both their employees and their business goals.