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Best Constructive Dismissal Guide (All You Need To Know)

Wondering what is constructive dismissal?

How is constructive dismissal defined and what are its legal components?

Don’t go very far because we’ve got exactly what you need!

In this article, we will look at all you need to know about constructive dismissal. 

We’ll look at what it means, when you can claim it and how to prove your case.

We have divided this article into the following sections:

Let’s get started!

What is a dismissal

To understand the constructive dismissal definition, we must first understand the term dismissal.

A dismissal is when an employer unilaterally puts an end to your employment contract.

Your employer’s dismissal must be in compliance with the employment laws in Quebec.

Article 2091 of the Civil Code of Quebec indicates that either party may terminate an employment contract by giving the other a notice of termination.

In this context, the employer dismisses the employee but must provide that employee with a sufficient notice taking into account the nature of the employment, the specific circumstances surrounding the dismissal and the duration of the work.

We typically refer to this as a “termination”.

Article 2094 provides further that a party may, for serious reasons, unilaterally end the employment contract without a prior notice.

If there is a justifiable cause or a “serious reason”, an employer may terminate an employment agreement without giving the employee any notice.

An employer is justified to dismiss an employee for insubordination, lack of skills or poor performance for example.

We typically refer to this as a “dismissal”.

A dismissal is the termination of the employment contract particularly related to the employee and his or her characteristics such as performance, attitude, theft and so on.

The end of your employment will be considered as a “dismissal” when it is based on subjective motives related to your personal characteristics whereas it will be considered a “termination” when it is based on economic or technical reasons not related to you.

For a dismissal to be legal, the employer must comply with the requirements of the law.

What is constructive dismissal

Constructive dismissal describes a situation where your employer has not fired you or dismissed you but acted in such a way that you were forced to quit.

It could also be that the employer has acted in bad faith or with malice to provoke your resignation.

Constructive dismissal definition by the Supreme Court of Canada

At its essence, constructive dismissal is a situation where your employer unilaterally changes your work conditions, responsibilities and duties without your consent leading you to abandon your job in most cases.

The Supreme Court of Canada defined the term constructive dismissal in the Farber vs Royal Trust Co. case in 1997.

The Supreme Court indicated that when an employer unilaterally and substantially modifies the essential elements of an employment contract without the employee’s consent or approval leading to the employee’s departure, we have a constructive dismissal case.

Constructive dismissal in Quebec law

The term “constructive dismissal” is not a term specifically found in the Civil Code of Quebec.

In the Quebec laws, the meaning of constructive dismissal comes from the Canadian common law. 

It is when an employer unilaterally alters the essence of your employment contract in material terms without giving sufficient advance notice or your consent.

Even if you may have quit your job, constructive dismissal is considered to be an act of dismissal by your employer.

As a result, since the constructive dismissal is a dismissal, then your employer must have given you proper notice and indemnity as applicable if there was no serious reason to dismiss you without notice.

Induced constructive dismissal 

Constructive dismissal involves two concepts:

  1. Induced dismissal
  2. Substantial change of the employment contract

An induced dismissal is when an employer acts in such a way as to provoke the employee’s resignation.

In this context, there is an intentional element or an element of bad faith.

This can be when an employer deliberately excludes you from important meetings resulting in your inability to meet your objectives.

Perhaps the work environment is so toxic or you are the subject of personal attacks or remarks making it intolerable for you to stay on the job.

It could be when an employer gives you so many competing responsibilities that you are overwhelmed and unable to achieve any of them.

Constructive dismissal for substantial change in employment contract

If an employer unilaterally and materially changes the terms and conditions of an employment contract without the consent of the employee leading to the employee’s departure, we have a constructive dismissal case.

Constructive dismissal on the basis of a substantial change in the employment contract does not necessarily require the bad faith of the employer. 

Changing work conditions can be:

  1. Salary reduction
  2. Change of responsibilities
  3. Demotion
  4. Reduction of work hours
  5. The promise of future benefits in exchange for a change in responsibilities
  6. Elimination of bonus and performance-based compensation 
  7. Not recalling an employee after layoff
  8. Unlimited administrative suspension followed by termination 

There are many ways the work conditions may change, what’s important is that the work conditions are an essential component of the employment contract.

When can you claim constructive dismissal 

You can file for a constructive dismissal case either before you resign or after.

If your work environment has become so toxic and intolerable that you are no longer able to continue working, you can still file a constructive dismissal claim even after you resign.

It is not essential for you to leave your job for a court to conclude that there was a constructive dismissal.

For example, if you accepted a forced transfer or a demotion, you can still file for a constructive dismissal case under section 124 of the Act Respecting the Labour Standards in Quebec.

It can be less risky for you to stay on the job while you file for your complaint to mitigate risk but this can be easier said than done.

If your employer is inducing you in bad faith for you to quit, we can understand that it can be quite challenging to continue working at the same place while filing for a constructive dismissal case.

It’s not an easy situation to be in.

You may need to consult with an employment lawyer to define your options so you can make the best decision possible.

Under the Labour Standards Act in Quebec, you must file your constructive dismissal claim within 45 days whereas if you file a claim under the Civil Code of Quebec, you’ll have the standard 3 years to file your claim before you are time-barred.

How to prove constructive dismissal

In Canada, the Supreme Court of Canada has rendered two important judgments providing guidance and clarity with respect to constructive dismissal cases:

  1. Farber vs. Royal Trust Co. in 1997
  2. Potter vs New Brunswick Legal Aid Services Commission in 2015

Let’s go over the requirements on how to prove a constructive dismissal case.

The reasonable person test 

The Supreme Court has provided guidance in the Farber vs. Royal Trust Co. case that there is a constructive dismissal when the employer substantially changes the essential terms of an employment contract.

If that is the case, the court must apply the reasonable person test.

The question to be asked is: would a reasonable person in the same situation as the employee have felt that the essential terms of the employment contract were changed?

If the answer is yes, then the court must conclude that the employer has substantially changed the essential terms of an employment contract.

Constructive dismissal forms

A constructive dismissal can result in two forms:

  1. Due to a single act by the employer violating essential terms of an employment contract
  2. Due to a series of acts that when considered together show the employer violated essential terms of an employment contract

The employer’s unilateral actions, whether one single act or multiple acts, leading to the resignation of the employee can be considered as actions leading to a constructive dismissal case.

Employer’s bad faith

An employee who has quit his or her job due to the employer’s constructive dismissal does not need to prove the employer’s bad faith or intention behind its actions.

Proving the fact that a single act or series of acts have resulted in provoking the resignation of the employee or substantially changing the terms of the employment contract is enough for a constructive dismissal case.

If the bad faith or malice of the employer is proved, the court may take that into account in the award of damages.

The Act Respecting Labour Standards in Quebec

In addition to the Civil Code of Quebec, an employee in Quebec can also file a constructive dismissal claim under article 124 and 128 of the Labour Standards Act.

Under Section 124 and 128 of the Labour Standards Act, you must prove the following:

  1. You are an employee within the meaning of the Act
  2. You have been employed for an uninterrupted period of 2 years 
  3. The employer substantially changed the terms of your employment contract
  4. There must be no other remedial procedure
  5. Complaint must be filed within 45 days of the dismissal

Once the employee establishes the above, the burden of proof shifts onto the employer who will have to prove that there was a good and sufficient cause for the dismissal.

What remedies or damages can you get for constructive dismissal

In Quebec, in the event of constructive dismissal, what remedies or damages can you get?

Under the Act Respecting the Labour Standards, you can ask for:

  1. Reintegration to your job
  2. Damages in the amount of equal to your salary if you were not dismissed

Under the Civil Code of Quebec, you can also ask for damages due to the unilateral resiliation of the employment contract.

Punitive damages for constructive dismissal

The courts in Quebec can, in exceptional cases, award punitive damages to an employee who was terminated in the context of a constructive dismissal claim.

Article 1621 of the Civil Code of Quebec allows for the court to award punitive damages if a specific law expressly allows it.

When the law allows for the court to award punitive damages, the amount of punitive damages should be enough to prevent the breaching party from repeating the same behaviour.

In 2011, the Superior Cout of Quebec awarded punitive damages in a constructive dismissal case involving a senior executive working for IBM Canada.

In this particular case, the court granted the senior executive $35,000 in moral damages along with $300,000 in punitive damages for being the victim of his employer’s attack to his dignity and reputation. 

Employers must be careful that if the constructive dismissal case opens the door to claims of discrimination, attack to reputation or dignity of a person, then the courts may have the ability to award punitive damages as well.

Takeaways

Constructive dismissal is when your employer behaves in such a way as to induce or provoke your resignation or unilaterally alters the terms of your employment contract without your consent.

The law protects employees against the actions of the employer, whether they were deliberate or not, in substantially changing the terms of the employment contract without the employees approval.

Under Quebec employment laws, you can file for a constructive dismissal case without having been dismissed.

For instance, if you were demoted unilaterally and without your consent, a court may conclude you were subject to a constructive dismissal.

In this article, we’ve covered all the details you need to know about constructive dismissal.

With what we’ve presented here, you will have a good idea if you actually have a constructive dismissal case and how to go about it.

We hope you enjoyed this article and wish you all the best in your employment relations.

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