What is constructive dismissal?
Constructive dismissal is when an employee resigns due to the employer creating a negative work environment. Since the employee’s resignation is involuntary and a result of unreasonable work pressures, the employee can claim wrongful dismissal. Under the Employment Standards Act (ESA), the employee must resign within a reasonable time period of the change being made to claim constructive dismissal.
Employees looking to make a claim for constructive dismissal must be stating they experienced one of the two following situations:
Intolerable workplace: When the employee experiences harassment, bullying or another form of abuse from their employer that makes the work conditions unbearable.
Unilateral change of an essential term of employment: In this scenario, the employee experiences a significant and detrimental change to the terms of their employment, such as:
- An unfavorable change in work location;
- A pay cut;
- A substantial change in job responsibilities; or
- An unjustified demotion.
If an employer is found responsible for constructively dismissing an employee, they will have to provide the employee with a severance package.
How can business owners avoid constructive dismissal claims?
As a business owner, it is in your company’s best interest to create a work environment in which employees feel empowered and valued. Fostering a positive and supportive work environment helps motivate employees to achieve their highest performance. Use these tips to prevent constructive dismissal claims:
- Have clear communication to an employee surrounding any significant changes to their job.
- If you must make a major change to an employee’s role (e.g., switching the office they work out of), provide the employee with reasonable notice. This would be the same amount of notice you would give if you were terminating the individual.
- When making substantial changes to an employee’s role, confirm the changes in writing and have your employee sign off on the change.
Need help with constructive dismissal in your business?
If you are seeking advice on handling a constructive dismissal claim in your organization, speak with our HR experts to receive employer best practices. For further assistance on constructive dismissals or other HR or health and safety questions, reach out to us: 1 (833) 247-3652.