Constructive Dismissal & Wrongful Termination
What is Constructive Dismissal
Wrongful, or constructive dismissal is a termination of employment that is contrary to the law. As a matter of law, an employer can terminate an employee’s employment for any reason or no reason at all (subject to a few exceptions like that employment being part of a collective agreement, protection under human rights or worker compensation legislation, or protected leave under employment standards legislation like the BC Employment Standards Act or the Canada Labour Code).
Constructive dismissal is not a moral indictment on the employer. Instead, a wrongful dismissal occurs when an employee is terminated without adequate notice (or pay in lieu of notice) or without just cause. We will explore these topics more below.
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How is a wrongful dismissal different from constructive dismissal?
Constructive dismissal is a type of wrongful dismissal. While many wrongful dismissal claims involve a clear and direct decision by the employer to end the employment relationship, a constructive dismissal claim alleges that the employer’s conduct shows the employer’s intention to no longer be legally bound by the employer-employee relationship. This conduct can involve a single incident (e.g., an unpaid suspension) or multiple incidents (e.g., a series of reorganizations taking away an employee’s staff or prestige in the business). These changes can range from subtle changes to situations where the employer is trying to bully or push the employee to quit the job without dismissing the employee.
Constructive dismissal is a fact-focused exercise. It requires the careful gathering of the evidence and judgment in determining what will be persuasive to a court or tribunal hearing the case. At Hutchison Oss-Cech Marlatt we have years of experience assisting employees to evaluate claims of constructive dismissal and we have years of experience advising businesses about changes to their organization to avoid constructive dismissal claims. As a result, we have a team of lawyers that can give you guidance on claims of constructive dismissal, which arise in many of the following situations:
- Reorganization and restructuring of the business
- Suspension or discipline of employees
- Changes in compensation or benefits
- Bullying and harassment
- Sexual harassment
- Toxic work environments
- Failure to accommodate a disability
- Discrimination under human rights legislation
Whether you are an employer or an employee, it is important for you to know where the line is for constructive dismissal and get clear advice on your options moving forward. The claim for compensation between wrongful dismissal and constructive dismissal can be the same, but there can be slight differences depending on the type of forum in which the claim is brought. We can help you determine what is the best step forward for you.
What does it mean for an employer to act in “bad faith”?
When an employer decides to terminate an employee, they have an implied obligation to act with good faith and fair dealing with the employee in the manner of dismissal. This obligation was imposed by the courts given the power imbalance between employees and employers. An employer’s failure to adhere to this obligation can constitute an “actionable wrong” and is sufficient to result in an award of either aggravated or punitive damages against an employer.
This obligation to act in good faith includes a requirement to investigate allegations of misconduct and give employees fair opportunities to respond. It includes an obligation on employers not to fabricate grounds for just cause or maintain unfounded allegations of cause. It includes an obligation to treat employees in a respectful manner and not take advantage of the employer’s power over the employee improperly. Bad faith conduct can include:
- Refusing to issue a record of employment
- Humiliating the employee before their colleagues
- Refusing to pay outstanding wages
- Failing to provide a standard reference
- Bullying and harassment
- Sexual harassment
- Failure to adhere to harassment policies
- Lying or misleading employees
- Failing to conduct fair investigations into misconduct
These types of cases are decided on a case-by-case basis and the courts and tribunals look at the circumstances of the employment and the conduct of the employer in that situation.
It is tempting for employees to bring forward an entire list of complaints about how an employer operates their business. However, the focus of bad faith claims is on the manner of dismissal (which in constructive dismissal cases can include managerial decisions or re-organizations). If the employer was upfront, transparent, and made reasonable efforts in the dismissal then bad faith will not be found.
If the employer did breach this obligation, then the employee can seek different types of damages in addition to lost wages depending upon the forum their claim is being litigated in. These damages can include aggravated damages (seeking for example damages for causing mental health concerns beyond those normally suffered after losing a job) or punitive damages (seeking compensation for conduct that is viewed objectively as harsh, vindictive, or malicious).
If you have been subject to bad faith conduct, then you should seek legal advice and we can help you evaluate your claim. If you or your business are being accused of such conduct, then you need legal advice.
What is a dismissal for “just cause”?
A termination “with cause” or “just cause” is an allegation that the employee has misbehaved so significantly that the misconduct has resulted in a fundamental break of the employment relationship. An employer may have just cause to terminate an employee if they can prove an employee has:
- Committed a significant breach of trust, stolen property, or acted violently
- Failed to abide by workplace safety standards
- Ignored or failed to follow workplace policies and protocols
- Was insolent, used vulgar language, or disobeyed the employer
- Engaged in a conflict of interest with the employer
- Failed to attend work repeatedly
- Lied and/or was otherwise dishonest
- Was significantly incompetent after being given repeated warnings and opportunities to improve
Whether an employer has “just cause” is a context-specific scenario that must be proven by the employer. The courts and tribunals will look at the type of employment, the expectations of both the employee and the employer, the type of misconduct, the context of the working relationship, and whether other less serious forms of discipline were sufficient.
The courts and tribunals evaluate these types of dismissals very carefully and employers need to know that it is not just a matter of opinion. An employer needs to provide sufficient evidence to prove just cause. In other words, a fair reason to consider the employee’s misconduct (or multiple instances of misconduct) resulted in a fundamental break in the employment relationship.
For example, theft or a significant breach of trust can result in immediate termination whereas it is less common to establish just cause from incompetence or not being very good at the job. Establishing just cause for incompetence requires an employer to give the employee several warnings in writing to improve before incompetence can really be considered sufficient for just cause.
All allegations of misconduct are considered in the context of the employment relationship and whether ongoing employment was reasonable in the circumstances. Even instances of significant misconduct can be excused if the court finds that the employment relationship could continue. So, it is important to understand where the just cause is clear and what evidence is required to prove such a case. That is where Hutchison Oss-Cech Marlatt can help you. We know what it takes to prove these cases in courts and tribunals and we can be your guide in dealing with this difficult situation.
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