Before we begin our post on constructive dismissal, a brief update on a recent post, in which we reviewed the practice of online advertisers using targeted ad campaigns to advertise employment opportunities to selected age brackets. In a very unusual joint campaign, the Ontario and Canada Human Rights Commissions have this week announced a coordinated action against Facebook seeking an end to this practice. Stay tuned for further updates.

Constructive Dismissal

The employment law concept of constructive dismissal contains several difficult issues for the employee. The general rule is that an employee may treat a demotion in salary and responsibility to be tantamount to termination. This then will allow a possible damage claim based on the expected earnings in the notice period, usually determined by common law principles.

The employee is then presented with the conundrum of becoming unemployed in exchange for what may well be a lawsuit resulting in perhaps relatively modest compensation, especially when the employment history is brief. Even where the severance period may be relatively generous, the trade-off of unemployment may be not present an attractive alternative.

To make matters more difficult, there is a theory that the employee should stay in the reduced position to “mitigate” or minimize the damage claim. This is usually argued where the salary remains the same but nonetheless represents a tough choice as this may be a complete defence.

Even More Complex

Canadian common law has considered a situation which may mandate that the employee remain employed with the same company where the company offers the employee their prior position without restrictions. This leading case came from a direct termination. After unsuccessful negotiations, the employer offered the previously terminated employee his former job back.

Surprisingly the Court concluded that, barring unpleasantries between the parties, the employee was obliged to remain employed and denied the claim of wrongful dismissal.

Recent Case of Lay-Off

The same rules were recently applied to a constructive termination arising from a temporary lay-off. The Court agreed that the lay-off was indeed a termination but the offer of continuing employment denied the damage claim.

Employers’ Guide

The law does appear to allow the company some protection from a damages award by permitting an employer to extend an offer of continued employment in a constructive dismissal or even a direct dismissal context. This should always be done in good faith.

Employees’ Claims

The law on this subject is unduly complex. The stakes in walking away from employment in exchange for what may be an extended lawsuit are high. Legal advice is mandatory.

Get Advice Before You Act

If you have questions about this issue or any employment question, contact the offices of Toronto employment and labour lawyers Mallins Law. We regularly advise employees and employers on legal workplace issues. Contact us online or by phone at 647 792 0310 to schedule a consultation.