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Constructive Dismissal

Generally, when employees quit their jobs, they are not entitled to receive any compensation for the end of their employment from their employers. However, when an employee leaves employment because the employer has changed a fundamental term of the employment agreement without the employee’s permission, a court may find that the employee was constructively dismissed. In such circumstances, the employee will be entitled to the same notice period, or pay in lieu, that he or she would have been entitled to if the employer had terminated the employment.

Not all changes to an employment agreement will be so fundamental that they give rise to a constructive dismissal claim. Examples of fundamental changes include significant reduction in compensation, a requirement to relocate (where such relocation was not provided for in the employment contract), and significant changes in title, duties or responsibilities. There have also been decisions in which courts have found employees to have been constructively dismissed when the employer’s abusive treatment of the employee rendered continued employment intolerable.

Constructive dismissal cases can be difficult to make. The onus is on the employee to prove that he or she has been constructively dismissed. This involves proving both that the employer acted unilaterally, and that the change was fundamental. Because constructive dismissal cases are so fact-specific, they require a careful assessment of the employment conditions, the employer’s proposed changes, whether the employer has provided sufficient notice of the change, and whether or not the employee accepted the proposed change.

Employees should speak with a lawyer and obtain legal advice before they decide to leave their jobs and sue for constructive dismissal. Similarly, employers who want to implement a significant change to an employment agreement should obtain legal advice about how to do so without becoming exposed to a constructive dismissal claim.

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