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Constructive Dismissal: When Your Job Changes in a Big Way  - What you should know

What you should know

If your employer changes your work situation in a major 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.

Some changes to your job are not constructive dismissal

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. 

Changes to your job that may be constructive dismissal

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.

The law of constructive dismissal is complicated. Consider getting legal advice as soon as you feel like there are major changes to your work situation you don’t agree with. If you don’t have access to a lawyer, there are options for free or low-cost legal help.

You may lose some of your rights if you continue to work for your employer without objecting

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.

A constructive dismissal claim is a drastic step to take. The success of such a claim is based on the facts of each case. It’s a good idea to seek legal advice before deciding to pursue a claim.

You must try to minimize your loss

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. 

Changes to your job may end your employment under the law

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.