HARD LABOUR – BY WARDSPC LAWYERS
BEING FORCED TO QUIT YOUR JOB AND YOUR ABILITY TO STILL CLAIM SEVERANCE PAY. CONSTRUCTIVE DISMISSAL - WHEN QUITTING IS NOT REALLY QUITTING. NEED-TO-KNOW TIPS FOR BOTH YOU AND YOUR EMPLOYER
Employment in Ontario is constantly changing. Businesses are changing, for various reasons. Workforce need may vary during the year for many businesses. Employers are regularly trying to improve efficiency, reduce costs and improve the bottom line. This may involve lay offs, downsizing, reducing overhead (including payroll) and reorganizations.
These economic realities for many employers may lead them to try to modify their employment relationships.
While employers are generally entitled to change the nature of an employee’s position, if the change is fundamental to the relationship, certain protections arise for the employee; namely, the remedy of constructive dismissal. Fundamental changes unilaterally imposed by employers, such as to pay, availability of work or benefits, for example, unless the employee consents, may constitute a constructive dismissal of the employee. If so, the employee may be entitled to reject the change, refuse to continue to work and claim damages for being terminated, constructively.
DEFINITION – CONSTRUCTIVE DISMISSAL:
The definition of constructive dismissal is: when an employer makes a unilateral and fundamental change to a term or condition of an employment contract, without providing reasonable notice of that change to the employee. This action amounts to a repudiation of the contract of employment by the employer, regardless if that was intended, and deemed refusal to continue the employment relationship. Therefore, the employee may consider the contract wrongfully terminated and quit or resign which, in turn, gives rise to an obligation by the employer to provide damages in lieu of reasonable notice, similar to an outright, wrongful termination.
THE FOUR CATEGORIES OF CONSTRUCTIVE DISMISSAL:
Generally, if a fundamental change is made by the employer, the Court will categorize the change into one of four, different scenarios to assess if it constructive dismissal.
Firstly, if the new term is imposed by the employer immediately (without notice), but with the employee’s consent, there is no constructive dismissal and the relationship continues, subject to the new term.
Secondly, if that occurs, and the change is fundamental to the employee’s job terms, who does not consent, there will be a constructive dismissal.
Thirdly, if the new term (or fundamental change) only becomes effective after reasonable notice of that change is given by the employer, there will be no constructive dismissal, even if the employee does not consent to the change. The amount of notice required to be given by the employer depends on several factors, such as age, length of employment, nature of the position, the terms of the written employment agreement, if any, and other factors generally considered by the Court in wrongful termination cases to assess pay in lieu of notice.
Lastly, if the employee does not accept the new term and, as a result, the employer does not impose it, there cannot be a constructive dismissal.
If a constructive dismissal occurs, the employee has a duty to mitigate his or her damages, which may include an obligation to return to the same job from which the employee has been constructively dismissed (with the change), depending on the facts of the specific case and whether the employee can demonstrate that he or she could not reasonably be expected to mitigate damages by returning.
“POISONED” WORK ENVIRONMENT
In an employee faces discrimination or other negative workplace experiences that may create a “poisoned” work environment, it may also create a constructive dismissal situation, even if no specific change was made by the employer. Generally, discrimination, harassment, and loss of dignity or self-respect do not need to be accepted by employees – they have a remedy; namely, a possible claim of constructive dismissal.
SIGNS OF POTENTIAL CONSTRUCTIVE DISMISSAL:
Common indicators that you have been constructively dismissed include:
- reduction or elimination of compensation such as salary, bonuses, commissions, benefits, or pension entitlements;
- being temporarily laid off;
- a shift or scheduling change that cause significant hardship, such as to childcare and other family obligations or religious beliefs, or otherwise have a substantial impact on either personal or work life, or both, to the extent they are unfair or unreasonable;
- being transferred to another territory or business location;
- being demoted, or having responsibilities reduced, or being placed in a substantially different position; and/or
- being required to work in a ‘poisoned’ workplace environment.
TIPS TO BOTH EMPLOYERS AND EMPLOYEES:
Any unilateral change by an employer to the terms of employment do not automatically constitute constructive dismissal - an employer has the right and ability to decide the terms of employment it wishes to offer its employees, but it cannot change existing terms of employment, if they are fundamental in nature, without giving an employee appropriate notice of the changes. If that appropriate notice is given, the employee must either accept or reject the changes and, if the latter, quit or resign, as opposed to insisting on the terms of employment he or she wishes to have;
The notice to the employee should be express, clear and unequivocal (and ideally in writing) – if there is any uncertainty in the notice, or whether the employee’s job would end if he or she did not accept the change (at the end of the notice period), the uncertainty is likely to be resolved in favour of the employee. Therefore, if the employer is not clear with the employee, or otherwise acquiesces to the employee’s rejection of the change, the notice of the change may be “voided” and not protect the employer from constructive dismissal liability. The notice must be clear, reaffirmed and followed-up on the employer to avoid liability. The employer should expressly make it clear to the employee that if, at the end of the notice period, the employee does not accept the change, the employee will be terminated as of that time. Ideally the employer will conduct this in writing, including following-up with the employee during and at the end of the notice period by affirming that a termination will happen if the employee rejects the change. The employer should also carefully avoid simply informing the employee he or she will be terminated at the end of the notice period – this may cause the employee “stress and trauma” (or an ability to assert this impact) and void the notice. Accordingly, the notice must effectively balance the objective of giving it against avoiding any undue “stress and trauma” to the employee; and
The position must remain the same during the notice period – the status quo must be maintained, including compensation. If any change, even a different change, occurs during the notice period, it may potentially void the notice for the intended change.
Wronko v. Western Inventory Service Ltd., 2008 ONCA 327 (CanLII)
Nufrio v. Allstate Insurance Company of Canada, 2016 ONSC 2791 (CanLII)
Thank you for reading this - Jason Ward of WARDS PC LAWYERS.
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This WARDSPC BLAWG is for general information only. It is not legal advice, or intended to be. Specific or more information may be necessary before advice could be provided for your circumstances.
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