When to react to employment changes
A constructive dismissal is a termination of employment without anyone saying “you’re fired.” Sometimes it can be one fatal blow; a breach of the terms of employment so big and so significant the employee has the right to walk out the door and take the position they have been terminated. The test is whether a reasonable person would believe the employer has decided not to be bound by the terms of the employment relationship.
Sometimes, it is death by a thousand mosquito bites; it is the cumulative effect that establishes a constructive dismissal.
Paul sold his family funeral home business and as part of the deal signed a 10-year contract to act as the general manager. The purchaser drafted that contract and did not include an early termination clause. Paul was guaranteed 10 years of work.
The new owner, however, did not seem to like Paul. The owner asked an employee that reported to Paul to track how much time he was spending in the office and required Paul to complete time sheets. Even though it was part of the 10-year contract that Paul be permitted to use the company vehicle for personal use, the employer told him he could not. Paul objected in writing but nothing changed. Soon after, the locks to the funeral home were changed without anyone telling Paul. This treatment had predictable results and Paul went off sick for two weeks with a doctor’s note. Paul made it clear in writing he was on a medical leave and not stepping down from his position. Inevitably the medical leave was extended but Paul had occasion to visit the funeral home a few weeks later for his cousin’s service. He noticed his desk had been moved to the kitchen in the basement and his personal pictures had been removed.
By email, Paul inquired about some commissions he believed he was still owed but never received a response. Paul ended up staying on sick leave, and a year and a half after he went off, his lawyer issued a claim for constructive dismissal.
For the most part, the employer did not deny the events and treatment alleged by Paul. What they claimed was that Paul had condoned what had happened by his silence for almost 18 months and could not now suddenly claim he was constructively dismissed.
Ultimately, if Paul had been at work all that time, the employer would have won. If there is a significant breach of the employment contract like a big drop in pay or demotion, the courts expect an employee to act very quickly and take the position they have been constructively dismissed. It is impossible to lay down any hard and fast rule, but I usually tell people within two or three weeks they must make a decision. They cannot keep going to work and appear to be accepting the changes to the terms of their employment for an extended period of time and then suddenly claim they never
agreed to the change.
In a situation where it is the cumulative effect of a series of events and interactions, the same would apply. At some point the employee has to decide which straw has broken the camel’s back and act fairly promptly. Again, showing up for work every day for a month after the most recent incident would be interpreted by many judges as condonation and acceptance.
In Paul’s case, however, he was not at work and was not implying consent by his attendance. He was off sick as a result of the very treatment he had received at the hands of the employer. He was held by the judge not to have condoned or accepted the treatment he received and was awarded all the monies and benefits he would have earned had the 10-year contract been honoured. That amounted to more than a million dollars.
Few sane employers sign 10year fixed contracts with no way out, but I do see them when there is a purchase of a business and a new owner wants to ensure someone like Paul, the face of the business, stays on.
For employees who think they may have been constructively dismissed, before you walk out that door make sure you’ve talked to an employment lawyer. If you make the wrong decision and exit prematurely, you may end up without even employment insurance.