Do Employees Get Severance Package in Constructive Dismissal?

Severance Pay in Constructive Dismissal Cases

Under Ontario employment law, a constructive dismissal claim occurs when an employer makes significant changes to an employee’s employment relationship that make the job untenable. In such cases, the employee may be entitled to severance pay. This blog article will explore the factors that influence severance pay in constructive dismissal cases.

Understanding Constructive Dismissal

Constructive dismissal is essentially an unofficial form of termination of employment, even though the employee may not have resigned or been explicitly fired. It arises when an employer creates a significant negative change to the terms or conditions of an employee’s job without the employee’s consent, or a harmful work environment that is so intolerable or harmful that the employee is forced to quit.

1. Fundamental Changes to Employment Terms

Reduction in Salary or Benefits: A significant reduction in pay or benefits, such as health insurance or pension contributions.
Demotion: Being demoted to a lower-paying or less prestigious position without the employee’s consent.
Change in Job Duties: Being assigned significantly different or more demanding tasks than those originally agreed upon.
Relocation: Being forced to relocate to a different city or region without reasonable accommodation.

Example: An employee is hired as a sales manager in Toronto but is later transferred to a remote location without a corresponding increase in salary or benefits. This could constitute constructive dismissal if the relocation is unreasonable and the employee is not adequately compensated.

2. Harassment or Hostile Work Environment

Workplace Bullying: Persistent, offensive and unwelcome comments and behaviour that creates a hostile work environment.
Discrimination: Treating an employee unfairly or unequally at work based on protected grounds such as race, gender, age, disability, or religion, such as a discriminatory termination of employment or passing over an employee for promotion or pay raise.
Sexual Harassment: Unwanted sexual advances, requests for sexual favors, or other sexually-oriented conduct that creates a hostile work environment.

Example: An employee is subjected to constant insults and ridicule by a supervisor based on his older age and health condition, creating a hostile work environment. This could constitute constructive dismissal if the employer fails to take appropriate action to address the harassment and discrimination, including conducting an independent and thorough workplace harassment investigation and steps to prevent it from re-occurring.

3. Breach of Fundamental Terms of the Employment Contract

Failing to Pay Compensation: The employers fails to pay or withholds an employee’s compensation, including salary without legal justification.
Violation of Privacy: The employer invades the employee’s privacy in a significant way, such as monitoring their personal communications or accessing their medical records without consent.
Failure to Provide Necessary Tools or Resources: The employer fails to provide the employee with the necessary tools or resources to perform their job effectively, and then demoting the employee alleging failure to perform their job as required.
Breach of Implied Term of Good Faith: The employer acts in bad faith or breaches an implied term of the employment relationship, such as a promise of job security or promotion.

Example: An employer refuses to provide an employee with a laptop or internet access, making it impossible for them to perform their job duties. This could constitute constructive dismissal if the employer has a duty to provide these resources, and especially if they rely on the employee’s inability to do their job as a reason to demote them or termination their employment (wrongful dismissal).

4. Significant Changes to Work Hours or Conditions

Excessive Overtime: Requiring an employee to work excessive overtime without adequate compensation or time off.
Unreasonable Work Schedules: Imposing unreasonable or unpredictable work schedules and deadlines for employees to perform their tasks.
Unsafe Working Conditions: Exposing an employee to hazardous or dangerous working conditions.

Example: An employee is required to work over 60 hours per week without overtime pay and is denied vacation time pay when they are otherwise entitled to receive overtime pay under the Ontario Employment Standards Act, 2000. This could constitute constructive dismissal if the working conditions are unreasonable and harmful.

It’s important to note that these are just a few examples of constructive dismissal. The specific circumstances of each case will determine whether constructive dismissal has occurred. If you believe you may be a victim of constructive dismissal,it’s advisable to consult with an employment lawyer for legal advice.

Severance Pay in Constructive Dismissal

In cases of constructive dismissal, employees are generally entitled to financial compensation in the form of a severance package (just as in a wrongful dismissal where an employer terminates employment without cause). The amount of severance will depend on several factors, including:

Length of service: The longer an employee has been with the company, the greater their entitlement to severance pay.
Salary and benefits: Higher-paid employees with more substantial benefits may be entitled to larger severance packages, such as Vice Presidents, Directors, or Senior Managers.
Age: The older an employee is in a termination of employment, the more severance pay they are entitled to, on the assumption it will generally be harder for older workers to re-employ when competing against perhaps younger or more qualified candidates for the same or similar jobs.
Industry and company practices: The specific industry and the company’s usual practices can influence the amount of severance pay, such as lower notice of termination (or severance pay) in the construction industry which is considered seasonal.
Employee’s efforts to mitigate losses: The employee’s efforts to find new employment will be considered. If the employee finds a new job quickly, the severance pay may be reduced.

Severance Package Negotiations

An Ontario employment lawyer’s role in negotiating a severance package in a constructive dismissal claim is crucial. Among other things, experienced employment lawyer can provide invaluable guidance and representation throughout the negotiation process, ensuring an employee receives the best possible financial compensation from their employer.

An experienced employment lawyer can negotiate on your behalf to secure a fair severance package, including by:

Assess the initial offer: Evaluate the employer’s initial severance package offer and identify areas for negotiation.
Identify additional entitlements: Help you determine if you are entitled to any other benefits, such as extended health insurance, bonus pay, and valuable pension plan benefits or contributions in a case of constructive dismissal or wrongful dismissal.
Negotiate on your behalf: Advocate for a fair settlement that meets your needs and expectations.

Consultation with Employment Lawyer

Book a confidential consultation with our Toronto employment law firm to protect your legal rights to understand your options and protect your rights.

Why Choose Bune Law When You Need an Ontario Employment Lawyer?

Experience in all areas of workplace law, including wrongful dismissal claims, constructive dismissal claims, severance package reviews, severance package negotiations, discrimination and human rights disputes, and employment contract reviews.
Proven track record of successfully resolving workplace disputes through negotiation, mediation, and employment litigation.
Compassionate and personalized approach to each case, ensuring tailored solutions that meet your specific needs.

If you need a Toronto employment lawyer who is committed to delivering strong results and proactive solutions, please contact Bune Law online or by phone today at 647-822-5492.