Quit To Sue For Constructive Dismissal

You could quit and sue for constructive dismissal If your employer's behaviour towards you amounts to a fundamental (i.e. very serious) breach of contract. This breach is shaped by the explicit contractual terms, as well as the relationship of trust and confidence between employer and employee (‘implied’ terms).

Proving A Case of Constructive Dismissal

It is usually easier to prove a breach of an express term than an implied term. Circumstances of this kind can include where an employer takes away benefits set out in a contract, the removal of job responsibilities set out in the contract, enforcing a pay-cut, enforcing an unjustified suspension, failure to provide safe working conditions. However, a breach of implied terms can still be proven, and any act made in bad faith, from which the employee-employer relationship of trust and confidence is broken without good reason, will most likely qualify.

Resignation Letter or Notice to Employer

One of the most important steps for an employee who intends to resign on grounds of constructive dismissal must take is to first inform the employer of the breach of contract. There must have been a breach before the resignation is tendered or there can be no constructive dismissal.

The resignation letter of an employee looking to make a claim of constructive dismissal should include a statement in which the employee explains how they feel they have no other choice but to resign. It is also a good idea for an employee to give the employer clear reason(s) for their resignation. In an instance where the breach of contract consists of a series of events or conducts, these actions can be grouped together to form a fundamental breach of contract, even if the last incident does not count as a fundamental breach on its own.

How Long Can An Employee Wait Before Quitting?

To successfully claim constructive dismissal the employee must normally quit from his or her employment within a “reasonable” period of time of the employer’s unilateral change. If the employee does not resign within that time frame, the employee will be found to have implicitly accepted the change.

The length of time an employee will have to decide whether or not he or she accepts the change will vary depending on the type of change that triggered the right to claim constructive dismissal and the personal circumstances of the employee. For example, an employee whose compensation has been significantly reduced may be required to make a decision relatively quickly. However, an employee whose job duties have been significantly altered will likely enjoy a relatively longer period of time to try out the new role, before being required to make a definitive decision.

Legal Test for Constructive Dismissal

The legal test for constructive dismissal has both objective and subjective components in it.  The Court will ask whether a “reasonable” third person similarly situated as the employee would consider the change so significant that it fundamentally altered the employment relationship.

Although the rationale behind the employer’s motivation for implementing the unilateral change to the terms of employment, nor the subjective view of an employee as to whether a breach is material are not decisive in the Court’s decision.

The duty of good faith and the relationship of employer-employee trust and confidence are inherent in all employment contracts, and thus if the employer has actual knowledge that a particular term in the employment contract is of paramount importance to the employee, i.e. a condition precedent to the contract signing, rather than a warranty, a promise given by the employer to the employee, the Court will likely find that such contractual term to be material. For the same token, if the employer acted in bad faith when making the change, it may result in the court ordering the employer to pay punitive or moral damages, in addition to damages for wrongful dismissal.

The Obligation of a Constructively Dismissed Employee to Remain with His or Her Employer

If the employer offers a new employment contract to the employee with altered terms, does an employer has to accept it? The current state of law in Ontario is that if the new employment contract is fundamentally different than the original one, the employee has no duty whatsoever to accept the “re-employment”. The Main question to ask is whether the new alternative employment is substantially similar to the original one. If an employee is required to have a pay-cut of 30%, or be demoted from a managerial position to a clerical position, chances are a Court will not find the “re-employment” to be substantially similar.

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