Changes to your Employment? When do they Amount to Constructive Dismissal?

As the work environment/employment conditions have evolved over the past few years as a result of the COVID-19 pandemic, some employees may be considering the implications of various changes to their employment/roles. Despite the changes, the employee is still employed. Some may wonder – do I need to accept these changes? Or could these changes be sufficient to support a constructive dismissal claim? “Constructive dismissal” is a term that is used to describe significant changes to an employee’s role which are sufficient to support a conclusion that the employer has breached the employment contract. In such circumstances, the employee can pursue the employer for damages even though the employee hasn’t been “terminated” from the job. As one can expect from its complex name, proving a case of constructive dismissal is not easy or simple.

 A recent decision rendered by Justice D.A. Broad provides a refresher on the legal test for proving a “constructive dismissal”. In Nicholas v. Dr. Edyta Witulska Dentistry Professional Corporation, Justice Broad set out the two routes an employee can follow to prove a constructive dismissal:

• Where an employer has, by a single unilateral act, breached an essential term of the contract of employment (there are 2 components to this route, see A and B); or
  1. The employer’s conduct must be found to constitute a breach of the employment contract, and
  2. The conduct must be found to substantially alter an essential term of the contract.

• Where there has been a series of acts that, taken together, show that the employer no longer intended to be bound by the contract.

The key, for both routes 1 and 2, is that it is the employer’s perceived intention to no longer be bound by the contract that gives rise to the constructive dismissal finding. Complicated? It can be, but a case analysis is helpful in determining what is not constructive dismissal as concluded by Justice Broad.

The plaintiff, Shelley Nicholas, is a registered dental hygienist who was employed on a part-time basis by the defendant, Dr. Witulska, until she resigned from her employment on July 23, 2018. Shelley had been employed under an unwritten employment contract with a Dr. Veer from 1991 until 2011, when Dr. Witulska purchased the dental practice from Dr. Veer. Shelley’s employment did not change in any material respect following the transfer of ownership. Shelley continued her employment under the unwritten employment contract until July 17, 2018, when Dr. Witulska suggested entering a written employment contract. On July 23, 2018, Shelley resigned from her employment with Dr. Witulska. In the fall of 2018, she became employed by a competing dental practice located less than 0.5 km from Dr. Witulska’s office and sued Dr. Witulska for constructive dismissal.

What led to this lawsuit? Shelley met with Dr. Witulska on July 17, 2018 for her annual performance review and after some negotiation, Shelley executed the written Employment Agreement. After the Agreement was signed, Shelley was presented with a sheet listing 25 days that she had been absent over the past year, albeit for medical reasons. She was advised that the missed days impacted the business greatly and also affected her team members. Dr. Witulska believed that Shelley was no longer able to handle working 3 days a week, and presented her with a new schedule which required her to work only 2 days a week.

Shelley claimed that the unilateral reduction in her hours and remuneration by 33% constituted a breach of the employment contract on the part of the defendant which substantially altered an essential term of the contract. Additionally, by punishing her for her unavoidable medical absences, the defendant demonstrated an intention to no longer be bound by the terms of the employment contract, which made her continued employment intolerable. Justice Broad disagreed with Shelley, concluded that there was no constructive dismissal, and dismissed her case.

How did Shelley’s claim fail? There was no dispute that until February 2016, Shelley’s normal work schedule comprised of only two shifts per week, and that on that date she was assigned a third shift on a temporary basis during the maternity leave of another hygienist. Shelley led no evidence that this “temporary arrangement” had become permanent after February 2016, so the third shift did not represent an essential term of her contract of employment. Additionally, the Employment Agreement entered into on July 17, 2018 came into effect immediately upon its execution, and the Agreement provided that the number of hours and days worked per week were in the defendant’s sole discretion and was subject to variation. Therefore, there was no breach of an essential term of the written contract either.

Since Shelley’s only complaint was the unilateral reduction in her hours, she also failed to meet the second route for proving a constructive dismissal; the second route can only be proven by a series of acts by the employer which, taken together, show that the employer no longer intended to be bound by the contract. A single act will not suffice.

Of course, there are employment changes that do meet the tests for constructive dismissal. When faced with circumstances that may support a constructive dismissal claim, it is important to consult with a knowledgeable lawyer to receive appropriate advice and make informed decisions about your legal options.