What is “constructive dismissal”?

Can you quit a job, and yet still be fired?  Can an employer fire employees even though they seem to have left the job of their own free will?  These questions are not riddles or zen koans, but refer instead to one of the trickiest concepts in employment law: “constructive dismissal.”

“Constructive dismissal” sounds like it might be a good thing – sort of like “constructive criticism.”  The reality is different.  “Constructive dismissal” may have occurred in the following scenarios:

Susan is employed as a sales manager in downtown Toronto.  Her boss tells her that, due to changing priorities in the company, she will have to re-locate to Inuvik.  Rather than make the move, Susan quits.

Bob runs one of the departments at Acme Co., and has twenty people reporting to him.  After a corporate reorganization, Bob is demoted, his responsibilities greatly diminished, and he is asked to take a 50% pay cut.  Bob quits, deciding to try his luck on the job market instead of accepting the new circumstances.

In both of these cases, the employer has unilaterally changed the terms of employment so greatly that the original employment contract seems to have been violated.  When she was hired, Susan was never told that her job could involve relocation.  Bob was hired into a managerial position and it was never indicated that his responsibilities and salary could be reduced.

“Constructive dismissal” may also be a possibility in the following scenario:

Jane is a receptionist in a downtown office.  Her supervisor, Sally, is very demanding and impatient.  If Jane makes the slightest error, Sally yells at her, even if there are other people around.  Jane is good at her job, but she gets so nervous when Sally is around that she makes errors.  Jane dislikes conflict and the situation is starting to get to her.  The stress is affecting her health.  She has tried to speak with the Human Resources Department, but they said that they couldn’t do anything.  It seems that Sally has a history of this kind of behaviour.  Rather than confront Sally and stand up for herself, Jane quits.

In each of these cases, I have said that constructive dismissal may be a possibility.  This is an important issue because it affects severance pay.  An employee who quits is not usually entitled to severance pay.  But an employee who is dismissed (or constructively dismissed) may be entitled to severance pay. 

I am not a lawyer and this blog is not intended as legal advice.  Constructive dismissal is a very tricky area.  If you think that you may be in a situation where constructive dismissal is a possibility, please get legal advice before taking any action.  You can contact the Employment Standards Information Centre, or to get advice about your specific situation, contact an employment lawyer. 

If you are an employer, please consult with a lawyer about your obligations under the Employment Standards Act before thinking creatively about how to “encourage” employees to move along.  Fulfilling your obligations under the law might prove costly, but not as expensive as losing in court.