Common examples of constructive dismissal

“Constructive dismissal is not an actual dismissal but rather action taken by the employer that's unilateral and is a fundamental breach of the employee's contract, which the employee chooses to treat as if they were dismissed,” says Christopher Drinovz, partner at KSW Lawyers.  

Drinovz will be speaking at the upcoming virtual event Employment Law Masterclass Vancouver, which will be held on Feb. 22, 2024. Drinovz’s session is titled ‘How to handle challenging Constructive Dismissal and Without Cause Terminations: avoiding wrongful dismissal claims.’

Drinovz’s session will highlight the legal test for constructive dismissal, key concepts like reasonable notice, and some of the current trends seen in recent cases.

Dismissal and reasonable notice

In the absence of having an unenforceable termination clause, an employer must give reasonable notice under common law, based on the employee’s age, length of service, position, and availability of similar employment.

So, if employers are found liable for constructive dismissal, then the way damages are assessed for the employee will either be under the written employment contract or under the common law principles of reasonable notice, Drinovz says about his upcoming session at the Employment Law Masterclass Vancouver.

“In constructive dismissal cases, the employee can accept that conduct as being a repudiation of their employment, treat themselves as constructively dismissed and essentially resign and leave the employment,” he says.

Common examples of constructive dismissal

There are multiple ways constructive dismissal can occur, but common examples include a demotion to a lower prestige position, the changing of duties in a fundamental way to a different type of work, title or position that has less notoriety or can be considered demeaning or working for someone who you used to supervise.

Additionally, Drinovz notes that there are a number of interesting cases regarding work location, for example, transferring an employee to another city that would cause them to have a significantly longer commute or make different arrangements with their family. Other big examples concern changes in compensation and issues regarding workplace harassment and failure to provide a safe workplace.

“It’s not common to see a straight reduction in salary; however, sometimes we see changes in a commission structure or bonus plan that end up resulting in significantly less compensation for an employee, which could lead to allegations of constructive dismissal,” Drinovz says.

Using evidence uncovered post-termination for just cause

In most cases of termination, an employer discovers an employee’s misconduct while the individual is employed, which led to the decision to terminate for cause. However, if an employer discovers new information after a termination has occurred, which, if the employer had known about it while the employee was still there, would have been grounds for cause, they can use that information to retro actively say that the termination that was originally without cause should actually be for cause. This is known as after-acquired cause.

For example, if an employee is terminated without cause for business reasons with no misconduct alleged, and then the employer finds evidence of misconduct on the employee’s computer while cleaning it up, that information would allow the employer to re-characterize the termination as just cause. This would result in the employer not having to pay out severance or potentially getting back any severance that has already been paid because if the employer had known about the misconduct, they would have terminated for cause, says Drinovz.

“Cases like these get into some interesting issues about whether the employer should have known about the misconduct if they had been more diligent,” Drinovz says. “Sometimes employers try to fall back on this when they’re faced with wrongful dismissals to see if they can come up with a reason for just cause after the fact.”