Constructive dismissal occurs when an employer substantially
alters, without the employee's consent, an essential term of
the employee's contract of employment. This can give rise to
litigation and financial liability for an employer. However, for a
unilateral change by an employer to constitute constructive
dismissal, the change must be a fundamental one going to the root
of the contract. The ultimate question is whether a reasonable
person in the same situation as the employee would have felt that
the essential terms of the contract were being substantially
In a recent case, a municipal employee with 20 years of
seniority was transferred to a new position in the same location,
requiring the same qualifications, and remunerated at the same pay
grade. What changed was the nature of the job itself. Originally,
the employee's work involved "hands-on computer
engineering applications" to address traffic control issues in
real-time. She had a number of people reporting to her and
supervised the work of student interns. As a result of both
restructuring and improvements to traffic control technology, the
employee was transferred to a position that mainly involved writing
Requests for Proposals for traffic initiatives. The Court found
that the employee's job changed from one that was
"operational" to "administrative" in nature.
This was a fundamental, unilateral change. Therefore the employee
was constructively dismissed.
In the course of 20 years, the organization and
technological infrastructure of a company is bound to undergo
significant changes. How do you adjust an employee's duties in
line with a company's evolving practices, without the changes
being "fundamental" such that you could be liable for
constructive dismissal? When transferring an employee, there are
two perspectives to consider when determining if the new position
constitutes a fundamental change to their employment: the "big
picture" and the individual employee.
In this case, the subject matter that the
employee dealt with was consistent between the two positions
– she was working in the area of traffic management. But as
the Court pointed out, she was no longer involved in day-to-day
operations and instead dealt with the long-term administrative
organization of the department. From the "big picture"
perspective, this was a fundamental change to one's
The key perspective is that of the individual
employee. If a reasonable person in that employee's position
felt that the fundamental terms of their employment were changed
upon being transferred to a new position, they will be considered
constructively dismissed. Before imposing a job transfer, it may be
helpful to get a sense of the employee's perspective, along
with legal counsel, to determine whether they feel – or the
court may rule – that a change in their duties is
'fundamental' to the terms of their employment.
Written with the assistance of William
Goldbloom, articling student.
Norton Rose Fulbright Canada LLP
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