Constructive dismissal: When your job changes in a big way

“My employer told me I was being transferred to our company’s branch in a community 400 kms away. There's no way I could commute. My kids love their school here, and my husband has a good job that he would have to leave. I brought a claim against my employer, and won compensation as if I had been fired from my job.”

– Sharon, Coquitlam

Instead of saying “you’re fired!”, an employer might do something more subtle that is effectively like firing you. It may be an unexpected demotion. Or a significant reduction in hours or pay. 

If your employer changes your work situation in a fundamental way, and you don’t accept that change, you may have experienced a constructive dismissal. 

This applies when your employer does something that:

• changes a key aspect of your employment in a major way, and

• isn't something they're allowed to do under your employment contract, and 

• you don’t agree to or accept.

If you’ve been constructively dismissed, you have the same rights as someone who was fired without cause. That includes the right to notice (or pay instead). See our guidance on how much notice an employer needs to give you.

Sometimes your employer can change parts of your job without it being considered constructive dismissal. For example, they might ask you to work at a different location in the same city. If you’re reassigned to a different city, that’s a much bigger ask, and more likely to be constructive dismissal. 

Some changes might involve things you’ve already agreed to be flexible about. For example, your employer may have told you before hiring you that your work schedule could change. And you said you were okay with that. This would make it unlikely you could win a constructive dismissal claim based on a changed work schedule. 

Examples of changes serious enough to be constructive dismissal might include:

• Your employer significantly lowers your wages. 

• Your employer refuses to pay wages they owe you.

• Your employer takes away your core duties and lowers your position in the organization.

• Your employer abuses you, harrasses you, or discriminates against you in a way that violates your human rights.

• Your employer lays you off, but your employment contract doesn't allow for layoffs.

With pay reductions, a significant unilateral pay cut by the employer will almost always amount to constructive dismissal. This is true even where the employer’s reason for the pay cut is financial hardship. 

An exception is if the employment contract gives the employer the right to change your compensation at any time. Another exception might be if the pay reduction is small or incentive-based — for example, your employer cuts a bonus that accounts for a relatively small part of your total compensation.

If your employer changes your job, and you continue to work without objecting, you may lose some of your legal rights. This is called condonation. By failing to object, you’re basically saying you want to continue in your job despite the changes. 

However, choosing to quit your job after your employer has made changes to it can be tricky. So, before making this decision, it would be wise to get legal advice.

If you bring a claim for constructive dismissal, you will need to show you took steps to limit your financial loss. The law calls this mitigation. A person suffering harm has to take reasonable steps to mitigate (or limit) their loss.

For example, if you leave your job saying you were constructively dismissed, you have to make a reasonable effort to seek a new job. If you find a new job, the income you earn from it will be deducted from any constructive dismissal award you win.

In mitigating your loss, you are only required to take the steps that a reasonable person would take. You don’t have to make superhuman efforts. 

If your employer invites you to stay in your job while you seek a new one, think carefully before turning down the offer. Saying “no” might be seen as failing to mitigate your loss — that is, unless the workplace is hostile or it would be embarrassing to keep working.

Here’s an example. Say your employer cuts your salary by 20% without your consent. You decide you can’t afford to keep working at that rate, and bring a claim that you’ve been constructively dismissed. Your employer invites you to continue working while you look for a new job. If you refuse this offer, it could be argued you didn’t mitigate your loss. A court may deny your claim or reduce the amount of money you could receive if you are successful. 

If you’re covered by the Employment Standards Act (see who’s covered), you may have additional rights if your employer makes changes to your job. Under this law, if your employer "substantially alters" a condition of employment, the Employment Standards Branch can determine your employment has ended. This entitles you to the minimum notice period or severance pay required under the law.

In establishing this claim, you must show a change to your wages, working conditions or benefits which a reasonable person would find to be unfair and unreasonable. You don't have to show that the employer intended to encourage you to leave your employment. 

These rights are similar to the principle of constructive dismissal explained above, but different. Under employment standards law, it doesn't matter how long you wait after the changes before taking action. For example, there is no expectation that you say you're not accepting the changes, and there is no duty to mitigate your loss. If — in the judgment of the Employment Standards Branch — the changes substantially alter your employment, your employment is ended. Full stop. You are entitled to the minimum notice or pay required by law. 

If you feel your employer is making significant changes to your job that you don’t accept, it’s a good idea to get legal advice right away. You may have the same rights as someone who’s fired without cause — including the right to notice or severance pay. Then again, you may not. Every situation is different, and it can be difficult to prove a claim for constructive dismissal.

The quicker you act, the better. So long as you continue to work, your employer can claim you agreed, by your behaviour, to the changes — unless you speak up to make sure they know you don’t agree to the changes. 

A legal professional will be able to tell you what your options are, and how much you might be able to claim if you do leave your job. If you don’t have access to a lawyer, there are options for free or low-cost legal help.

Some types of documents can help you make your case that your employer is constructively dismissing you from your job. These include:

• your employment contract or job description

• any letters or emails between you and your employer about what you agreed to when you started the job

• letters, memos or emails from your employer discussing changes to your job or your working conditions

• pay stubs

• records of the hours you worked

It helps to keep notes about things that happen at work. For example, say your employer calls you into her office. She tells you your job title is changing from “supervisor” to “sales representative.” And your salary is being drastically cut. Writing down the details of a meeting like this can be very useful if you decide to bring a claim.

Before long, you need to make a decision one way or the other. If you keep working, you may weaken your claim you were constructively dismissed from your job. However, if your employer is abusing or harassing you, you may still be able to claim constructive dismissal even if you stay. It all depends on the facts of your specific case.

Depending on the situation, you might consider more formal options for taking action.

Bringing a legal action against your employer

One option is to sue your employer for constructive dismissal. If your lawsuit is for less than $35,000, you can sue in Small Claims Court. It’s faster and less complicated than suing in the BC Supreme Court. If your claim is for less than $5,000, it will go before the Civil Resolution Tribunal. This online tribunal encourages a collaborative approach to resolving disputes. 

Making an employment standards complaint 

If you’re covered by the Employment Standards Act (see who’s covered) and you think your employer has breached this law, you can make a complaint to the government office that administers the Act.  

For the steps to make a complaint, see our guidance on making an employment standards complaint.

Either way, note the time limits for taking action

There are time limits for making a complaint or starting legal action. You must start a complaint with the Employment Standards Branch within six months of your last day of work. The time limit to sue in the courts is two years. There may be steps you can take to extend the time limit and preserve your rights. A lawyer can explain your options, and help you decide on the best course of action.

If you decide to quit, you might be eligible to receive employment insurance (EI) benefits. (You will have to show you had a good reason to quit.) You should apply right away, as there are time limits for applying once you’ve left your job. See our guidance on applying for EI. 

A unilateral pay cut by your employer will almost always amount to constructive dismissal. That is particularly so if the pay cut is substantial, which 25% would be. The pay reduction is a significant change to a key term of your employment, which is grounds for a constructive dismissal claim. For more on pay reductions and constructive dismissal, see “What you should know,” above. 

The biggest risk is the court finding you weren’t forced to quit — you quit voluntarily. So you aren’t owed notice or severance pay.

In this case the shoe might suddenly be on the other foot. The court might find that you “repudiated” (broke the terms of) your contract. Depending on what your contract says, you might have to pay your employer for not giving them proper notice before quitting.

Another risk is losing your job and source of income. There’s no guarantee your claim will be successful. If the court rules in your employer’s favour, you may be left high and dry.

Seek legal advice if you think you’re being forced to quit your job. An experienced employment lawyer will be able to help you minimize your risk as you deal with your issue.