Constructive dismissal turns the tables, giving employees bargaining power when they feel their jobs have been redefined
Outside of legal circles, there is definitely a lot of confusion about exactly what a constructive dismissal is. This is understandable, because constructive dismissals can sometimes be difficult to pin down.
A constructive dismissal is not the same as an outright dismissal. With an outright dismissal, the employment comes to an end one way or another and everyone knows it. A constructive dismissal may involve a continuation of the employment, although something important about the employment has been changed.
Often, it is likely that the employer expresses its desire that the employment continue after making the change that leads to the constructive dismissal coming into existence.
So constructive dismissals are based on changes made to the employment contract, not the termination of the employment. The employment does not end with a constructive dismissal unless the employee chooses so.
Once the change has been made, the ball is in the employee’s court as to how the matter will play out, and the employer is in the position of waiting to see what the employee will do. For the employee, the trick with constructive dismissals is in quickly figuring out the change and whether it amounts to a constructive dismissal, and then reacting to it appropriately.
Why do important changes to the employment lead to constructive dismissals? Contracts are based on the principle of bargain. It takes two to make a bargain, in this case, the employer and the employee. Employment bargains usually contain terms such as title, reporting structure, hierarchy, hours of work, and of course, pay.
Here is the point that’s important from the employee’s point of view: to alter the terms of the bargain requires agreement, express or implied, from both the employer and employee. Varying terms without agreement can lead to potential for a constructive dismissal.
It is common knowledge that the employer is usually in the stronger bargaining position compared to the employee. Consequently, it comes as no surprise that it is typically the employer who makes an important change to the employment contract. Constructive dismissals typically occur when the employer makes broad stroke changes without the consent of the employee to clearly important terms, such as pay or title or duties, and the employee senses that he or she has suffered a loss that feels unfair, has gone too far, has fundamentally altered the employment contract into something else, and cannot be accepted.
However, it is quite possible for a constructive dismissal to occur in what appear to be far more subtle situations. Each employment is its own context. For example, hierarchy, reporting structure and being included in the “loop” can be very important terms in certain employments, such as management-level work. Hours or days of work, territories or product lines can be very important terms in certain sales employments. For the employer to fiddle with these terms without consent, even though other terms remain the same, can result in a constructive dismissal.
When a constructive dismissal arises, the employee is put to a choice. Keep working under the new terms, or accept the dismissal for what it is, bring the employment to its end and pursue damages. In making this choice, most people will first require legal advice.
Where the employee keeps working under the newly revised terms, at some point the employee’s right to claim the dismissal and damages that would otherwise exist from such changes will end permanently, and the contract or bargain will be amended to conform with the revisions or changes imposed by the employer. In that case, a new contract comes into existence reflecting the changes.
Where the employee accepts the dismissal, the contract comes to an end, and the employee is entitled to pursue the employer for the reasonable notice or pay in lieu of reasonable notice that the employment contract requires. Reasonable notice monetary damages can be extensive. Again, the employee will often require legal advice to determine what the reasonable notice is, and what to do next.