Often to avoid paying severance, the employer, rather than firing the employee, creates intolerable workplace conditions. The employer hopes that the employee will voluntarily quit the job without receiving severance pay. Constructive dismissal is an important tool that can be used by employees to prove that their resignation constitutes wrongful dismissal which possibly entitles them to severance pay.
In 2015, the Supreme Court of Canada in Potter v New Brunswick Legal Aid Services Commission, 2015 SCC 10 clarified the scope of constructive dismissal and the test used to identify it. Constructive dismissal can take two forms:
1. a single unilateral act that breaches an essential term of the contract, or
2. a series of acts that, taken together, demonstrate that the employer no longer intends to be bound by the employment contract.
In Potter, SCC identified the test for constructive dismissal. It consists of 2 branches:
1. Did the employer unilaterally change the term of the employment contract?
2. Does this change alter an essential term of the contract?
a. For this step of the analysis, the reasonable person test needs to be used. The court must ask if a reasonable employee in the same situation would have felt that an essential term of the contract has been substantially altered.
What are some situations that may be considered constructive dismissal?
· Decrease in salary
· Demotion
· Change in the employment location
· Increase in workload
· Reduction is status
· Workplace harassment, bullying
· Failure to accommodate
· Suspension (unless suspension with pay).
What to do if your employer is utilizing constructive dismissal
1. Keep records of all the communication pertaining to changes in a contract term or work condition(s).
2. Make it clear to your employer (preferably in writing) that the change is unacceptable.
3. Consult with a lawyer before quitting your job.
Please note that this article is only to be used as general information and it does not constitute legal advice. Contact our firm to discuss your specific legal needs, or to schedule a free initial consultation with a lawyer.
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