Sign that says time to say goodbye

By: Sharan Johal

What it means to resign from a workplace is quite commonly known to employees and independent contractors in the workforce; to resign is to voluntarily leave a job. However, the reason behind the resignation can make the difference between a finding of resignation on part of the worker versus a constructive dismissal on part of the employer. Constructive dismissal is a lesser-known concept and can occur more readily than expected.

Key Points

  • A finding of constructive dismissal requires the employer to break the employment contract by significantly changing fundamental parts of it without the employee’s consent.
  • Situations that may arise to constructive dismissal include a significant reduction in job responsibility or working hours, or a significant change in employment location.
  • Both employees and independent contractors may make claims for constructive dismissal.
  • The burden of proof to prove that constructive dismissal took place, on a balance of probabilities, is on the worker.
  • The complaint must be filed within 90 days from the day the terms of employment were modified by the employer.
  • The court may expect the worker to continue working at the place of employment to mitigate damages while filing the complaint.

What is constructive dismissal?

A constructive dismissal is where an employer has not fired the employee (or contractor) directly but has broken the employment contract significantly by changing the worker’s job or important aspects of it (like work environment or responsibilities). This change must have occurred unilaterally, meaning they occurred without the worker’s consent. 

This is especially clear where once these changes have occurred, the only real alternative other than complying with these significant changes is for the worker to leave. The employee will usually resign within a short period of time after being notified of the changes.

A finding that a worker was constructively dismissed entitles them to termination pay and severance. If you’re not sure how much severance you could be entitled to receive, use our Termination Compensation Calculator to receive an estimate!

What can constructive dismissal look like?

There are common situations that might trigger constructive dismissal:

·      Significant reduction or removal of job responsibility: where there is a reduction of the employee’s regular dutiesSignificant reduction of compensation

·      Dismissal or demotion threats: where an employee quits due to threats of either dismissal or demotion

·      Significant decrease in working hours or employment location change: this may be a situation of constructive dismissal only if the employee was not told that location change was a part of the job

·      Employment status changes from employee to independent contractor: this is important because once that change occurs, you are no longer entitled to any protections under the Employment Standards Act (minimum wage, sick leave, EI and CPP contributions)

·      Requiring the worker to work in a discriminatory work environment (where employee endures ongoing discriminatory conduct, ongoing harassment)

Please note that is not an exhaustive list of situations that may show constructive dismissal. Minor changes to employment will usually not result in a finding of constructive dismissal.

Who can make a claim?

It is important to note that workers can make a claim for constructive dismissal regardless of whether they are an employee or independent contractor. 

Irrespective of that classification, workers are not implicitly automatically agreeing to unilateral changes that fundamentally alter the terms and nature of their contract agreement. When those fundamental changes have occurred without the employee’s consent, it means that the employer is not meeting their contractual obligations as set out in the original employment contract. Workers cannot agree to the employer breaking their contractual obligations.

Not sure if you’re an employee or contractor? Use our Classification Tool to help you determine which one you are. 

How can I show that constructive dismissal took place?

The burden is on the worker (you!) to prove that they were constructively dismissed. The standard of proof for establishing this is on a balance of probabilities. If this is not adequately proven, their leave will be considered a resignation and they will not be entitled to a severance package from their employer (if they’re an employee).

When leaving the place of employment, the reason for doing so (unilateral change to working conditions, etc.) must be cited for the reason of resignation in order to help properly ground a claim of constructive dismissal. If other reasons are cited, it might be difficult for the worker to claim later on what the real reason for leave was and to claim that they were constructively dismissed. Courts will view the situation objectively from the point of view of the employer, so it is important that ensure that the reason for leave is clear and relevant.

Office buildings

If a worker is filing a complaint regarding constructive dismissal, the complaint must be filed within 90 days from the day the terms of employment were modified by the employer. So, it is important to be careful in not waiting too long to bring a claim of constructive dismissal because if the worker waits too long, then that might be viewed as the worker having accepted the change.

You can bring a claim of constructive dismissal while you’re still working at your place of employment in order to mitigate damages if the way the change occurred was not humiliating. Alternatively, you can also bring a claim of constructive dismissal after you resign. However, it is more favourable to stay at your place of employment and mitigate your damages while making your claim at the same time, if possible. 

So, a successful claim of constructive dismissal will include a worker quitting within a reasonable period of time starting from the notice of the employer’s unilateral change. At the same time, the courts may have an expectation for the worker to continue working with the employer in order to mitigate damages if the way the change occurred was not humiliating.

Are there risks involved in bringing a claim?

Bringing a claim of constructive dismissal has its risks. If the worker cannot prove that a constructive dismissal took place, they will be found to have resigned. If that finding is made, the worker (if they are an employee) will not be entitled to a severance package. Because they have lost the dispute, they may have to pay some amount of the employer’s legal fees in addition to their own. The risks are not insignificant and is something to consider when exploring the possibility of bringing a claim. 

Before making a claim, it is important to seek the legal advice of an employment lawyer. To prepare for this, ensure that you have all documentation related to the employment changes before and after they were implemented. You can also contact the Employment Standards Information Centre at 1-800-531-5551 for more information on constructive dismissal. 

It is crucial to be aware of when situations of constructive dismissal have risen. It is important to know your rights, as a worker, and what significant changes to your employment can mean legally; and more importantly, that you are not obligated to absolutely accept those fundamental changes.

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