Being single in the shadow of Valentine’s Day is never easy, but watching a classic rom-com is a good way to alleviate the fake-holiday blues. Which is why I recently watched the hit movie “How to Lose a Guy in 10 Days”, where Kate Hudson’s Andie tries to make Matthew McConaughey’s Ben break up with her for a magazine article on dating don’ts.
What does this have to do with employment law? As I often say, dismissals are like breakups. As I watched this movie, all I could think about was that Andie was constructively dismissing Ben. And here’s the kicker: employers, knowingly or not, often get in trouble by doing essentially the same thing.
Ch-ch-ch-changes
Constructive dismissal can be complex and there is a lot that can be written about the topic. For this post we’ll stick to basics:
constructive dismissal is triggered when an employer makes substantial changes to fundamental terms of the employment relationship without having the right to make those changes, or without the employee’s consent.
This allows an employee to claim that they were constructively dismissed, which has the same effect as a dismissal without cause, entitling the employee to compensation.
That’s right, an employer who wants to break up with an employee cannot change its behaviour (e.g.: cut their shifts) in an effort to force the employee to quit – doing so risks liability for wrongful dismissal and additional damages. Nevertheless, we still speak with employers who want to try to get someone to quit in order to avoid severance costs, and it usually ends up costing them more than the severance would have.
How to Avoid Constructive Dismissal: Top 10 Don’ts
In an effort to help employers avoid triggering constructive dismissals, and to assist them in breaking up with their employees in a way that minimizes costs and liability, here are the top ten don’ts to avoid constructive dismissal.
In the absence of a contractual right, past practice, or the employee’s express consent, the following changes to the fundamental terms of the employment relationship risk triggering constructive dismissal:
As with suspensions, a layoff is only appropriate if the employer has the explicit or implicit right to do so. Layoffs are a common pitfall for employers, as many believe that they can lay-off employees by following the statutory requirements. This is a misunderstanding: the statutory requirements impose rules regarding layoffs, but do not give employers the right to lay employees off.
Contrary to popular belief, employees can only be suspended if their contract allows it, or if it is an established past practice. This is true even for paid suspensions.
Employers have a duty to provide a healthy and safe work environment - this is a fundamental term of employment. When employers allow the workplace to become toxic, or tolerate bullying and harassment, affected employees can claim constructive dismissal.
An employee’s compensation - salary, bonus, commissions and other items - is a core part of the employment contract. Changes to compensation are fundamental changes, and these changes should always be approached with extra care. While nominal changes may be ok, anything beyond 10% is risky.
In certain circumstances, changing a reporting relationship can be a fundamental change, particularly when it is or can be seen as a demotion. This includes situations where an employee reports to a co-worker they used to manage.
The location of work is a fundamental term. When an employer changes an employee’s location of work, it risks making a substantial change. This can include recalling an employee who works remotely to the office or requiring that they work from a different office location.
Similarly, when an employee is hired for a particular role, but their duties are changed so significantly that they are effectively working a different job, this can also constitute a substantial change in the terms of employment.
Normally an employee is hired for one job. While urgent circumstances may require an employee to take on extra work on a temporary basis, substantially increasing their duties can trigger a constructive dismissal.
An employee’s work schedule is an important part of the terms of their employment. Minor changes to scheduling and hours of work may be innocent, but more significant changes such as moving an employee from the day shift to the night shift, or substantially cutting their hours, is much riskier. While no longer scheduling an employee sends a clear message that you want them gone, it’s also an easy way to get hit with a constructive dismissal claim.
Employers set the rules of the workplace via policies, which form part of the terms of employment. However, absent clear written terms of employment, employees can also accrue rights. When a new policy changes a right an employee enjoys, such as terminating remote work arrangements, that can be a fundamental change.
Pith and Substance
That’s a lot of “don’ts” for what many employers may see as changes they want to be able to make. I want to emphasize that these are don’ts only in the absence of:
- a contractual right;
- the employee’s consent; or,
- in some cases, an established practice.
This is good news for employers because a well drafted employment agreement will give them the ability to change the terms of employment without exposing themselves to a constructive dismissal claim.
If you’re an employer, we can assist you with drafting strong employment agreements that give you the right to change key terms while locking in dismissal costs.
If you’re an employee and think you have been constructively dismissed, we can advise you as to the best strategic approach and assess your potential entitlements.
