Constructive Dismissal


Principles to be Applied

The law is clear that a finding of what would have normally been a constructive dismissal may be not actionable where the change has been accepted, or condoned, by the plaintiff. 1 The employee has a decision to make, either to accept the change or to take action. Acceptance or condonation of the change will deny the claim.

The burden to show condonation rests upon the employer. 2

To prove condonation, the employer must show facts which, when viewed objectively, reveal that the employee “consented freely to the change”. 3. The same decision noted that the employee must “be aware of the full implications of the changes before it can be said that the employee has consented to them.” 4

A recent Ontario case found that the plaintiff had accepted the new term, which was a temporary six week 25% reduction in income. The trial judge had found that such conduct would meet the liability test, but the employee had condoned the revision. This was found by his continuing employment through the period of the temporary wage reduction and after this period, when his wages were restored. This was so even though the plaintiff had stated he did not accept the wage reduction. 5

In a prior decision in 2004, the Ontario Court of Appeal 6 used a principled approach to the question on appeal, relying upon prior cases in Wallace and Ceccol to set the standards of fairness in assessing the conduct of the employee at the moment they have been advised of the new terms of employment.

The Court of Appeal noted the vulnerable position of the employee, given the inherent inequality in the relationship and the gravity of the issue to be faced, referring to a prior decision of the same court: 7

In an important line of cases in recent years, the Supreme Court of Canada has discussed often, with genuine eloquence, the role work plays in a person's life, the imbalance in many employer-employee relationships and the desirability of interpreting legislation and the common law to provide a measure of protection to vulnerable employees.

It also referenced a passage from Wallace, as follows:

The point at which the employment relationship ruptures is the time when the employee is most vulnerable and hence, most in need of protection. In recognition of this need, the law ought to encourage conduct that minimizes the damage and dislocation (both economic and personal) that result from dismissal.

The Court of Appeal was sympathetic to the employee’s circumstance:

The employees' predicament in such a situation is unenviable. If they leave their employment claiming constructive dismissal, they will face [page91 ]the immediate loss of job and income. They will not know when, or even if, they will find replacement employment. They will have to finance an action in an expensive legal system. Should the matter proceed to trial, they will bear the burden of proving they have been constructively dismissed. Years may pass before the dispute reaches trial, and when it does, the court may not agree with the position they have taken. From the beginning they face the prospect of paying the employer's legal costs. On the other hand, if the employees acknowledge an employer's changes and continue to work, they will be taken to have condoned the changes and will no longer be able to claim constructive dismissal if they are dissatisfied with the new terms and conditions of employment.

These views were expressed in the context of reviewing the issue of the time period which should be allowed for the employee’s decision to accept or reject the newly offered terms. These considerations are, however, important guard rails for the interpretation of the claim in broad terms.