As an employment lawyer and a Swiftie, relationships are on my mind. Our work and romantic relationships are significant; their breakdown is naturally disruptive. In my previous blog, I discussed two situations where “dumped” employees may need to get back together with their employers. The first was the sale of a business. The second, constructive dismissal, is often more complex, even in seemingly “obvious” cases. This post discusses the latter situation.
When employers terminate the employment relationship, they are supposed to provide the proper amount of notice, in writing. However, sometimes a termination is not so clear, such as when the employer unilaterally changes the terms of the relationship to the extent that it constitutes constructive dismissal, which has the same effect as an outright dismissal.
Should I Stay or Should I Go?
Constructive dismissals are challenging for employees, largely due to the duty to mitigate. Dismissed employees are expected to make reasonable efforts to offset their lost income by seeking new employment. In the constructive dismissal scenario, they still have their job; the duty to mitigate means they may have to stay, at least until they can find something else.
Another important consideration is whether leaving could be seen as a resignation, which would disentitle them to any notice. Success in constructive dismissal can come down to whether timely objections to changes were made, complicating decisions about staying or leaving.
In short, employees facing constructive dismissal must consider the following:
- Unlike a regular dismissal, the employee must prove that the employer dismissed them; if dismissal is not proven, then leaving is a resignation.
- If dismissal is established, the employee must then consider whether they need to stay on the job in order to mitigate.
Thus, consulting HR counsel is essential, as failing to mitigate by leaving without a good reason can greatly reduce potential damages, and taking the wrong steps when claiming constructive dismissal can result in a resignation.
Good Reasons for Leaving
The existence of a poisoned work environment, bullying or harassment are valid reasons for an employee to leave after claiming constructive dismissal, as it’s unreasonable to expect them to stay in a hostile or unsafe workplace. In such cases, leaving is not a failure to mitigate. Notably, these conditions can also justify a constructive dismissal claim, because employers have a duty to provide a safe workplace free of harassment as a term of employment. When employers fail in this duty, the employee can claim that they have been constructively dismissed because a fundamental term of the relationship has changed.
In addition to the foregoing concerns, employees are also not expected to stay when it would be demeaning. For instance, employees in a leadership role who were demoted, and would have to report to their former subordinates, may not be expected to stay on.
If the circumstances are such that a reasonable person would stay, then leaving may not be warranted and may disentitle the employee to compensation.
Although the above provides some guidance, it is important to keep in mind that regardless of the circumstances, every case is assessed individually.
Mitigation and the Rule Against Double-Dipping
Successful mitigation does not require securing a job offer, but it does require taking reasonable steps, which may include staying on the job or, more commonly, searching for a new one. If a dismissed employee finds new work, that income must be accounted for when calculating their notice award. This is because notice entitlements are meant to be a bridge between jobs; employees are not allowed to “double dip.” Any notice award will be reduced by income earned during the notice period.
Given the above, avoiding the job hunt entirely may seem tempting, but note that a failure to mitigate can significantly reduce, or eliminate entirely, any notice awarded. Employees should therefore take their duty to mitigate seriously.
Advice for Employers
Constructive dismissal can be costly for employers, as they are expensive to defend, and successful claims entitle employees to the same benefits as a dismissal without cause. To avoid such claims, employers should have well-drafted contracts giving them the right to make changes to the terms of employment. Strong policies and procedures against workplace violence and harassment also help prevent claims of unsafe or poisoned work environments. In the absence of the foregoing, documenting that an employee condoned changes to their employment can help defend a claim, though it is no substitute for proper contracts and policies.
The Upshot
Constructive dismissals are like onions – they have many layers. Whether you are an employee or an employer, you should consult HR counsel before taking any steps in these situations.
For employees, the risk is that leaving the job is deemed a resignation or failure to mitigate, which could reduce or eliminate your entitlements entirely. We can advise you and provide assistance as you navigate this difficult situation, while protecting your rights.
For employers, the risk is that seemingly innocuous changes to an employee’s duties, role, or compensation, for example, trigger a costly constructive dismissal claim. This could expose you to legal fees and to reasonable notice damages. Worse, you could fail to address harassment appropriately, exposing you to damages for notice and for bad faith. We can ensure that your contracts, policies, and procedures actually protect you from exposure to constructive dismissal claims. We can also review any claims and advise you as to their viability.
While it’s always a good idea to consult HR counsel, constructive dismissal really highlights the pitfalls in proceeding without legal advice – in these situations, if you think you need an employment lawyer, you really do!