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We have written this blog specifically because many employees have been facing a difficult dilemma in the COVID-19 era. Specifically, should employees accept significant changes to their employment, such as reduced wages or a demotion in their role, or should they leave their employment and claim termination pay and financial bridge to another job?      

What is Constructive Dismissal?

Constructive dismissal is where an employer makes such significant changes to the employee’s employment that the court considers this equal to a termination of employment.  An employee, therefore, has the option to claim that their employer’s actions amount to a repudiation of the employee’s employment contract.

In the context of COVID-19 an employee may, for example, claim that by being laid off from their employment their employer has effectively demonstrated that they no longer wish to be bound by the employment contract. Employees in this case may therefore attempt to claim constructive dismissal.

An employee who is successful in establishing that a constructive dismissal has occurred effectively triggers their termination entitlements under a valid contract of employment or, absent a contract with an enforceable termination provision, at common law.

Why you Should Consider Consulting with a Lawyer Before Making a Constructive Dismissal Claim

Not all changes to an employment contract will trigger constructive dismissal, as employers have the right to make reasonable changes to the terms of an employee’s employment.

There are also practical risks to claiming constructive dismissal including potential impacts on an employee’s ability to claim government support during their period of unemployment and a potential reduction in ultimate compensation from a claim as a result of mitigation efforts.

Therefore, before resigning and claiming constructive dismissal, it is worth seeking the advice of an employment lawyer to help assess the viability of a claim for constructive dismissal.

COVID-19 and its Impact on Constructive Dismissal Claims

In the context of COVID-19 it is likely that courts/decision makers, when reviewing constructive dismissal claims, will be sympathetic to employers and the changes that need to be made to the terms of an employee’s employment to cope with the new reality of the pandemic. In this context, it is even more important to speak with a qualified employment lawyer, as the rules are evolving.

I Have Already Walked Away – Now What?

If you have already left your employment with the intention of making a claim for constructive dismissal you should consider reviewing the following next steps with experienced employment law counsel:

Documenting Your Claim

If you intend to make a constructive dismissal claim it is important that you document this via tailored and written communications with your employer. This will assist your claim, in part, by creating a written record of your rejection of the relevant change to your employment and by putting on the record that you have not simply resigned from your employment.

Mitigating Your Damages

As an employee who has left their employment and will be claiming damages relating to the ending of your employment, you are required to mitigate your damages. This means that in general you need to be actively looking for and accepting employment that is similar and comparable to the employment position you left.

Mitigating your damages may also require that you accept employment with the employer you are claiming constructive dismissal against. If you are offered employment with the same employer against whom you are claiming constructive dismissal, you should contact an employment lawyer to review whether accepting this employment is required/reasonable and to document your reaction to the employer’s offer. Such communication could have a significant impact on your constructive dismissal case.

Consider Settlement

There is significant risk involved in making a constructive dismissal claim, especially in the time of COVID-19. For this reason, you should consider engaging in settlement discussions with the employer you are claiming against.

Negotiating a settlement in the context of a constructive dismissal claim is complex and if negotiation is not approached appropriately this could ultimately compromise your claim. For this reason, we strongly recommend that you consider consulting with a qualified lawyer before engaging in settlement discussions with the employer you are intending to claim constructive dismissal against.

Seek out Support

When employees make a claim for constructive dismissal, their employer generally takes the position that the employee has resigned from their employment. This can make it difficult to secure employment insurance (“EI”) and may impact the employee’s claim for other government support in the context of COVID-19, including the Canada Emergency Response Benefit (“CERB”) since generally, entitlement to these forms of support relies on a disruption in earnings triggered by the employer.

Therefore, before claiming constructive dismissal, employees should assess their potential entitlement to government support during their period of unemployment and assume that their employer will issue them a Record of Employment indicating that they have resigned.

Employees should make their claim for government support as soon as possible after they leave their employment and may consider following up with their employer if their access to such support is compromised as a result of documentation issued by the employer to the relevant government bodies.

If you have any questions relating to COVID-19 and your employment, whether you have been temporarily laid off, fired, wrongfully dismissed, re-called to work or otherwise, please contact Toronto employment lawyers Sultan Lawyers at 416-214-5111 or via email at mlahert@sultanlawyers.com.


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