Constructing your dismissal: How to tell if you’ve been constructively dismissed

If your employer has recently changed sometime significant about your non-union job, you may have been constructively dismissed. But don’t quit just yet. You have some legal options, and familiarizing yourself with them can help inform your response so that even if you can’t get your old job back, you can at least get some compensation to help tide you over to the next one.

Even the law can’t force your employer to transfer you back

Unfortunately, unless you’re unionized (which makes things very different), the law in Ontario can’t get you your old job back.  So aside from finagling a re-transfer with your employer, your sole recourse is to obtain financial compensation, either through a negotiated settlement or through a lawsuit.

More than a minor modification to your contract may be a constructive dismissal

A constructive dismissal happens when your employer imposes changes to your job, salary, or other terms so much that it’s like you’ve been fired from your old job and hired into a new one. Hence, your employer has ‘constructed’ your dismissal. While your employer can lawfully modify many terms of employment somewhat, once these modifications pass a certain threshold (more on that threshold below…), they may amount to a constructive dismissal; that is, you may have been legally dismissed from your old job and technically hired into the new one without your employer explicitly telling you.

What is significant about a constructive dismissal is that it entitles you either to a period of the notice before the changes take effect, or to wages ‘in lieu’ of notice (‘in lieu’ is a fancy term of art to replace the highly technical word ‘instead’).  How this entitlement plays out in practice is best illustrated by an example: imagine your employer approaches you, demands your keys, and tells you that effective immediately, you are to move into the cafeteria to perform your work, you are no longer to use your phone or e-mail, you are no longer authorized to sign off on expenses, and finally your compensation will be cut in half.  You have been constructively dismissed.

Now what?  In this scenario based loosely on a real case, you are entitled to wages in lieu of the notice you should have received well in advance of the changes taking effect.  That means that because your employer didn’t notify you, in advance, of significant changes to your job, your employer is instead legally required to pay your wages at your previous salary level, including benefits, for the period of notice that you were owed in the first place.  The length of this notice period depends on a number of factors, including what your written contract says about it, if anything, and if not, the notice depends largely on how long you’ve been employed, what your age is, and what you do.

But you have to act quickly

It may take you a few days or weeks to decide whether you like your new job. Typically, that’s okay. But at a certain point, if you stay too long without objecting to the changes, the law may deem you to have ‘condoned’ the change. This is why it’s critical to speak to a lawyer or paralegal quickly after learning of any impending changes to your employment.

Modifications amounting to a constructive dismissal

Your salary is a good starting point for deciding whether you have been constructively dismissed.  If your salary has been reduced by less than 10% without any other changes to responsibilities or status, it may be difficult to persuade a judge you have been constructively dismissed.  If the reduction is between 14 and 17%, and there haven’t been any other changes to responsibilities or status, then your employer is walking a fine line, but it may have stepped just shy of constructively dismissing you.

If, however, your salary has been reduced by 20% or more, even without additional changes, it is likely that you have been constructively dismissed.  Or, if your salary has been reduced by 14 to 17%, and the reduction was accompanied by other significant changes, then your employer has likely crossed the legal line; you have likely been constructively dismissed.

These rough thresholds, however, can shift significantly if your employer has acted in bad faith.  That is to say, if your employer has modified your position not out of economic necessity, but out of a malicious desire to drive you to quit, then the threshold of constructive dismissal is more easily crossed.  Conversely, an employer who has been compelled by tough economic circumstances to change your responsibilities or even reduce your salary is afforded more latitude by the law.

That brings us to non-monetary modifications, such as transfers or reassignment of responsibilities.  Because these changes are not easily measured, it can be even more challenging to discern a constructive dismissal for a transfer or reassignment than for a monetary change.  Nevertheless, non-monetary modifications have been the subject of a plethora of lawsuits.  These lawsuits have been initiated on the basis of a wide diversity of non-monetary contractual modifications, including demotions, promotions, lateral transfers, geographical relocations, reduced responsibilities, increased responsibilities, changes in reporting requirements, changes to the nature of duties, loss of management functions, reduced advancement opportunities, as well as other changes.

  1. Reassignments without demotion and lateral job transfers

    If your duties have changed but you haven’t been demoted, it will be more difficult to persuade a judge of constructive dismissal.  This difficulty will increase especially in cases where it was just the proportion of time spent on individual duties that had shifted.  In Zifkin v. Axa Insurance (Canada), for example, no constructive dismissal was found where the Plaintiff’s supervisory role diminished and his casework increased since he had both supervised and done casework prior to the modification to his duties.

    In Corker v. University of British Columbia, on the other hand, the Plaintiff counsellor was told that she would no longer be counselling students, and was instead assigned a variety of other tasks in the same department.  Though neither the Plaintiff’s salary, nor benefits, nor job title changed, she was considered to have been constructively dismissed because her job description contemplated counselling specifically, but contained no mention of the activities she was later instructed to perform.

  2. Loss of job satisfaction and differing skill set

    Sometimes courts have found constructive dismissal where an employee was transferred out of a job he or she enjoyed and into one with less enjoyable duties.  In Wilkinson v. T. Eaton Co., for example, the clerk-typist Plaintiff was instructed to work part-time as a sales representative.  Because she disliked sales and was not a competent salesperson, she was found to have been constructively dismissed by the court, which accepted the Plaintiff’s assertion that the two jobs were very different and required a very different skill set.

  3. Change in workspace

    A relocation to a different workspace will not generally qualify, but if the relocation is one of several changes indicative of a demotion, it will weigh in favour of a finding of constructive dismissal.  Moreover, constructive dismissal may be found where an employee’s workspace has been changed repeatedly over a short period of time.

You have to minimize your losses

Even if you don’t technically have to accept the modified job, you are still required, by law, to look for a new job, the eventual income of which would then be deducted from your wages in lieu of notice if ever you have the great misfortune of having to sue your employer.

What to do next…

Here are some steps to follow if you think you have been constructively dismissed:

  1. Don’t make any rash decisions. The law gives you a ‘trial period’ to see how you feel about the modifications, but don’t push it. Come talk to us soon.
  2. If you haven’t already done so, do not explicitly agree to the modifications before talking to a lawyer.
  3. Go find your contract of employment because it may contain provisions dealing with circumstances such as these. If the contract is long, tedious, and uncomfortable, send it to us (tedious and uncomfortable are our lifeblood).
  4. And then call us or someone else (but preferably us) for a quick chat about your options. Many lawyers, including ourselves, are easily manipulated into giving a bit of legal advice in exchange for a modicum of positive reinforcement.  And even if it costs you a consultation fee up front, it will save you serious stress and $$ later on by helping you avoid suing your employer, or putting you in a good position if you have to sue later on.

NOTE: This is legal information, not legal advice. The difference is that legal information is general whereas legal advice is related to your specific circumstances. The information provided may or may not apply to you. For legal advice, contact us.