Constructive Dismissal: Resignation with Severance

Constructive Dismissal: Resignation with Severance

As an employee, you have the right to resign from your job for various reasons, such as seeking better opportunities or personal reasons. However, what happens when your employer makes fundamental changes to your job conditions without your consent, leaving you with no other option but to resign? This is called constructive dismissal, and it is a crucial issue in employment law.

Constructive Dismissal: Incorrect Assumptions

As businesses expand, reorganize, and downsize, difficult decisions arise, leading to significant changes in employees’ work conditions. These changes may include demotions, pay reductions, transfers to faraway locations, or other fundamental changes to your job. 

When faced with these changes, employees often feel that refusing the change gives their employer the right to constructive dismissal. Alternatively, employers often assume that if an employee resigns due to change, the employee is not entitled to severance. 

However, both assumptions are completely incorrect. An employment lawyer can help guide you through the process if you find yourself in a situation involving constructive dismissal.

Constructive Dismissal: What Is It?

Constructive dismissal is when an employer makes significant changes to your employment terms and conditions without your agreement. These changes are fundamental, and they can include a substantial cut in pay, a demotion, a change in location, or a change in working hours. 

Constructive dismissal under the Labour Program of the Federal Government of Canada occurs when an employee resigns from their job due to the employer’s conduct. This resignation is considered a termination of employment, and the employee may be entitled to severance.

Constructive dismissal is called “disguised dismissal” or “quitting with cause” because the employer effectively forces the employee to resign instead of dismissing them directly. The two types of constructive dismissal are monetary and non-monetary. 

Monetary constructive dismissal occurs when an employer reduces an employee’s pay without their consent. Non-monetary constructive dismissal occurs when an employer makes changes to an employee’s working conditions, such as changes in duties or work hours, that substantially breach the employment contract.

Signs of constructive dismissal

Several signs indicate that you might be experiencing constructive dismissal, including unjustified suspensions, refusals to accommodate, threats, and suspensions. These include:

  • a substantial increase in workload; a toxic work environment; 
  • a change of shifts or decrease in the number of work hours; 
  • a new work location; 
  • demotion; and 
  • reduced compensation (salary and benefits). 

If you notice any of these signs, it is essential to act immediately.

What to do if compensation has been slashed or your working conditions are unbearable

If your compensation has been slashed or your working conditions are unbearable, there are some steps you should take, including:

  • Do Not Accept the Change: Do not feel pressured to accept any changes to your employment terms and conditions if you do not agree with them. If you feel that the changes are significant enough to constitute constructive dismissal, you should not accept them.
  • Keep Good Records: Keep detailed records of the changes made by your employer and the reasons for your objections. This documentation can help support your claim of constructive dismissal.
  • Before You Quit – Consult a Lawyer: Consult with an employment lawyer in Toronto before resigning from your job. They can provide you with legal advice and help you determine if the changes made to your employment terms and conditions constitute constructive dismissal.

Possible compensation for being constructively dismissed

If you’ve been constructively dismissed, you may be entitled to compensation for the loss of your job. This can include severance pay, which is typically based on your length of service with the company, your age, and your job duties. 

In Toronto, the Employment Standards Act sets out the minimum severance pay that employees are entitled to based on their length of service. However, if you have a written employment contract that provides for greater severance pay, you may be entitled to that amount instead.

In addition to severance pay, you may also be entitled to other types of compensation, such as damages for breach of contract, lost wages, and the cost of finding a new job. An employment lawyer in Toronto can help you determine what you’re entitled to based on your specific situation.

constructive dismissal can be a complex and challenging situation for both employers and employees. As an employee, it is essential to recognize the signs of constructive dismissal, take appropriate action, and seek legal help to protect your rights. 

If you believe you have been constructively dismissed or have questions about your employment rights, it is essential to seek advice. Your labour lawyer can help you understand your rights, assess the strength of your case, and provide guidance on the best course of action. Remember to keep good records, do not accept changes that you believe to be fundamental, and always try to resolve the issue with your employer before resigning.


Leave feedback about this