Employee Dismissals and Wrongful Dismissal

Constructive Dismissal

If an employer makes a unilateral change to a fundamental term in the employment contract, it might constitute “constructive dismissal”. This might include changes such as:

  • a significant reduction in salary (generally, more than a 10% reduction in pay),
  • a significant change in benefits,
  • a significant change in job content or status,
  • a job transfer to a different geographic location if such a transfer was not a normal occurrence and was not contemplated in the employment contract.

The onus is on the employee to establish that he or she has been constructively dismissed: Potter v New Brunswick Legal Aid Service Commission, [2015] 1 SCR 500.

A suspension from work without pay for relatively short periods of time, for administrative reasons, where the employer is acting to protect legitimate business interests and acting in good faith may not be sufficient, in itself, to constitute constructive dismissal.

An employee who leaves the workplace or commences wrongful dismissal action against his or her employer may run the risk of being found by a court to have repudiated the employment contract (ie, quit instead of being constructively dismissed), in which case he or she will not be entitled to a severance payment.

Sometimes a determination will need to be made on whether an employee has, in the eyes of the law, resigned or been dismissed. For example, an employee who was harassed at work and so was unable to continue working in that workplace may resign, but depending on the circumstances, the departure may legally be considered to have been a dismissal.

The potential also exists for a court to find that the act of suing an employer while still at work can amount to just cause for dismissal.

An employee asserting constructive dismissal must still be able to demonstrate that he/she acted to mitigate his/her damages. In many cases, this could require the employee to continue working for his or her current employer while seeking other employment (Cayen v Woodwards Stores Ltd (1993), 75 BCLR (2d) 110 (CA)). The Supreme Court of Canada discussed the relationship between constructive dismissal and the duty to mitigate in Evans v Teamsters Local Union No. 31, 2008 SCC 20. An employee’s refusal to accept re- employment with the employer who fired him/her may in some cases be considered a failure to mitigate damages. However, this might not be so if the employer’s actions eroded trust between the parties. See: Fredrickson v. Newtech Dental Laboratory Inc., 2015 BCCA 357

An employee who does not complain about the changes imposed by the employer may be considered to have accepted the change or acquiesced to it, and be unable to later complain about them. An employee is generally permitted a reasonable time to determine whether he or she will accept the changes.


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