If an employer in Canada unilaterally makes substantial changes to an employee's employment contract - thereby fundamentally altering the terms and conditions of employment - and the employee does not consent to the changes and decides to quit, the employee may take the position that a constructive dismissal ocurred and the employee did not resign.
A number of factors could lead to the constructive dismissal of an employee, regardless of whether the employer intended for the employee to quit. Those factors may include:
- Reduction in salary
- Changes in benefits, bonuses or car allowance
- Transfer to a different and distant work location
- Imposition of additional or different responsibilities
- A demotion or newly limited authority
Recently the Supreme Court of Canada dealt with the test for constructive dismissal in the case Potter v. New Brunswick Legal Aid Services Commission, 2015 SCC 10. In that decision, Canada's highest court concluded that a non-unionized employee placed on an indefinite administrative suspension with pay by his employer without an explanation as to why the suspension was imposed had been constructively dismissed.
Questions of constructive dismissal have been raised by a recent civil claim filed in British Columbia Supreme Court. The notice was filed by the former chief operations officer (COO) and co-founder of Local Sphere Digital Media Inc., an online marketing company based in Vancouver.
The former COO claims that she was constructively dismissed after Local Sphere did not provide an agreed-upon moving expense payment and salary increase. Additionally, she claims that her employment agreement included commissions and a car allowance, but she reluctantly gave those up when, after moving from Montreal to Vancouver, she was told that her salary increase was no longer feasible.
The notice of civil claim states that the former COO is seeking damages for wrongful dismissal and/or breach of contract.
Employment contracts, severance package disputes and construtive or wrongful dismissals are areas the employment lawyers of Overholt Law have considerable collective experience with. If you have questions about any of these matters, please see our Employment Law overview.