Running a business or organization means constantly adapting to new realities. As part of these adjustments and adaptations, employers may decide to update the roles and responsibilities of their employees. However, if an employer makes a particularly extreme change to an employee’s employment agreement, the employee may be able to resign from their employment and claim constructive dismissal.
The phrase “constructive dismissal” describes a situation where an employer fundamentally alters the essential terms and conditions of an individual’s employment agreement without the employee’s consent, and in doing so, indicates that the employer is no longer bound by the terms of the employment contract. In other words, a constructive dismissal at law is essentially a breach by the employer of an essential term of the employment agreement such that the employee can treat the employer’s actions as a repudiation of the employment agreement, and as constituting a termination of their employment.
The employer may make changes to express or implied contractual terms. Express terms are those that are stated in the contract. Implied terms are more difficult to pin-point but are based on policy rationale or common intentions between the employer and employee when the contract was formed.
A repudiation of an employment contract by the employer does not automatically terminate that contract but confronts the employee with a number of choices, namely:
- Consent to the change in the terms of employment, expressly or implicitly, in which case the employment continues under altered terms;
- Reject the change and sue for damages;
- Reject the change, in which case the employer should terminate the employee’s employment on proper notice and offer re-employment on the new terms.
Examples of circumstances where an employee may bring a constructive dismissal claim against their employer are as follows:
- significant changes the employee’s duties, responsibilities, or status;
- drastic reduction of an employee’s wages or benefits; and
- persistent harassment, abusive behaviour, or other such conduct creating a toxic work environment, making it impossible for the employee to perform their duties.
Employers who are looking to prevent or respond to constructive dismissal claims should strongly consider seeking legal advice from an experienced British Columbia employment lawyer in this area.