01 May How to Avoid Constructive Dismissal
It is important to understand how constructive dismissal situations can be created, in order to limit the possibility of the resulting legal liability.
Constructive dismissal situations arise when you make a unilateral and fundamental change(s) to a term or condition of an employment contract or agreement. If the employee refuses to accept the imposed change(s), and you try to impose it anyway – the employee may consider your action as a constructive dismissal and sue for damages as if they had been terminated without cause or notice.
What constitutes a unilateral and fundamental change(s) does depend on the terms of each employment contract or agreement, so there is no standard approach to constructive dismissal.
There are four key considerations in any successful constructive dismissal claim:
- What are the express and/or implied terms and conditions of the employment contract or agreement – Only a change or changes to the essential terms of the contract or agreement will allow an employee to reject the change(s) and conclude they have been dismissed.
- Has there been a breach – In order for a breach of contract to exist, there must be an absence of consent on the part of the employee to any change(s) in the terms and conditions implemented. If the employee accepts the change(s) by, for example, continuing to work without objection or comment, the change may be deemed to have been accepted.
- Is the breach a fundamental one – When the change(s) is large enough to be said to be a fundamental change – such as a change to their essential duties, termination of a bonus, reduction in status/ position – then it can be considered a constructive dismissal.
- Assuming there is a breach, will the working conditions allow the employee to consider remaining on the job – Along with demonstrating that constructive dismissal has happened, the employee has an obligation to do his or her part to mitigate the loss by making reasonable attempts to find employment.
The above considerations are complex, and a number of factors apply to each. To reduce the risk of constructive dismissal claims, you should always obtain an employee’s consent for any substantial change(s) to the terms and conditions of their employment.
It is considered best practice to provide sufficient notice of any change to an affected employee, and to document the change in a revised employment contract or agreement. Should an employee strongly resist and reject the change, it is at this time that you would consider seeking legal advice to prepare for the possibility, a claim of constructive dismissal.
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If you would like guidance in how to avoid or handle situations of constructive dismissal, or with any other HR issue – please contact Lori Brudlo, Senior HR & Technology Advisor – [email protected].