What is Constructive Dismissal?
An employer may terminate the employment relationship expressly (for example, by giving the employee written or verbal notice of the termination of the employment relationship) or through “constructive dismissal”.
Constructive dismissal is the term used where an employee resigns in response to their employer’s conduct in breach of an important term of their employment contract or because the employer’s treatment of the employee demonstrates their intention not to be bound by the contract, making continued employment intolerable.
In either case, the employee is entitled to treat him or herself as having been “constructively dismissed”.
How to Prove Constructive Dismissal Based on a Breach of the Employment Contract
For a constructive dismissal claim based upon a breach of a term of the employment contract to succeed, the employee needs to show all of the following:
- The employer was in breach of an important term of the employment contract. This can be a breach of an express or an implied term.
- The breach is substantial.
- The employee objected to the employer’s breach of the employment contract.
- The employee resigned in response to that breach.
It may not be just one incident that amounts to a fundamental breach of the employment contract; sometimes it is a series of incidents or patterns of behaviour which, taken as a whole, amounts to such a breach. In these circumstances, a court may consider that any previous breaches of contract that may have otherwise been waived by the employee should be treated as revived as part of a continuing course of conduct.
How to Prove Constructive Dismissal Based On The Employer’s Intention not to be Bound Employment Contract
For a constructive dismissal claim based upon the employer’s intention not to be bound to the employment contract, the employee needs to prove that the employer’s conduct generally shows that it does not intend to be bound by the employment contract and that the employer’s treatment of the employee makes continued employment intolerable.
What to do if You want to Pursue a Constructive Dismissal Claim?
If you wish to pursue a claim for constructive dismissal, it is important that you promptly object to your employer’s breaches and/or improper conduct.
You may feel the desire to resign immediately, but before doing so you should attempt to negotiate an alternative acceptable solution with your employer.
The advantages of negotiating with your employer before you resign include:
- The problem may be resolved (or a settlement reached) at an early stage, thereby sparing the cost and stress of litigation.
- You look reasonable and conciliatory, which may help your case if you make a claim.
- You can take this time to assess the changes to see if they could be suitable for you. It is important that you do not take too much time, however, as the courts may conclude that you have accepted the breach or condoned your employer’s misconduct.
If you decide to negotiate for an acceptable solution before you resign, the basis for the constructive dismissal claim will not crystallize until your employer makes it clear that they are not prepared to alter their position.
If the constructive dismissal claim is based upon a fundamental breach, the employee should:
- Notify the employer of the employee’s objection before the employee resigns; and,
- Attempt to negotiate an acceptable alternative to the change, unless the negotiations would be patently futile.
Negotiations should relate to an acceptable alternative to the breach.
Indicating that the employee will only remain employer so long as the parties are negotiating the terms of a severance package will not be considered to be negotiations for an acceptable alternative to the breach.
Succeeding in a Constructive Dismissal Claim
To succeed in a claim for constructive dismissal, the employee will need to show that either they continued to object to the change and worked in mitigation of their damages, or they resigned in response to (or as a consequence of) the employer’s breach.
The reasons for resigning given by the employee in their resignation letter may become important evidence in establishing whether the employee did in fact resign in response to the breach.
The resignation letter should confirm whether the employee is resigning on notice or without notice, and also confirm the date that the employee considers their employment to have ended.
The resignation letter is important in constructive dismissal cases and should be reviewed or written by legal counsel specializing in employment law.
Compensation for a Constructive Dismissal Claim
If you can establish that you were constructively dismissed, the Court will consider what loss you have suffered as a result of the constructive dismissal.
The compensation for that loss will be designed to put you in the financial position you would have been in had you been dismissed without cause and with the appropriate reasonable or contractual notice.
This means that you would be entitled to your net pay and the value of any benefits that you would have received had you worked through your reasonable or contractual notice period.
You may also receive compensation for other applicable damages specific to your situation.
The Obligation to Mitigate Your Losses
You should be aware that you are under an obligation to mitigate your loss.
In some cases, the courts have held that the employee should have remained in their job, or accepted an alternative offer of employment from their employer, in mitigation of their damages.
If you choose to remain in your position in mitigation of your damages, it is important that you continue to object to your employer’s breach through this period of time.
If you choose to resign rather than stay in your job, a court will likely assess whether you have mitigated your damages by looking for another job.
If you find another job quickly, any compensation payable to you will be reduced by the amount of money you have earned during the period which would otherwise have been your notice period.
Failing to Take Steps to Mitigate Your Losses
The court may reduce compensation payable to you if it finds that you have not taken reasonable steps to seek alternative employment.
This will depend upon a number of factors including your experience and the state of the job market in your line of work.
The compensation for constructive dismissal will be reduced by an estimated amount, representing the mitigation income that you should have been able to earn during the notice period.
You should ensure to document all of your efforts in finding another job.
Conclusion
Constructive dismissal is a complicated area of the law. If you believe that your employer has constructively dismissed you, you should seek legal advice immediately.
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