What is Constructive Dismissal (and what can you do?)

The starting point in assessing employee issues is generally to look through your employment contract. There is employment legislation in place that ought to support your employment contract, and that legislation is considered a “floor of rights” – those rights can only be expanded on and not contracted out of.

What happens if my employer makes changes to my employment contract?

Generally speaking, any contract between parties cannot be altered without the agreement of the other party. This also applies to an employment contract, mostly. Employers are able to make some changes unilaterally, if done in good faith and for legitimate business purposes, provided they do not result in a fundamental change to your employment contract.

Employers cannot make unilateral changes that impact the fundamental terms and conditions of your employment. In some instances this can be considered as a ‘constructive dismissal’. Common examples of fundamental changes include:

  • Changes in compensation (typically reductions);
  • Changes in position, or responsibilities (demotion);
  • Changes in scheduling or hours worked; and
  • Changes in workplace environment (attitudes towards an employee etc.).

What is considered as constructive dismissal in one situation may not be considered as such in a different situation, that determination is case specific. Generally speaking, minor or temporary changes are not enough to amount to constructive dismissal, although multiple minor changes may cumulatively reach that result.

I think I am being constructively dismissed – What can I do?

Employees who believe material changes to their employment contract have occurred can generally take the following steps:

Agree to the changes.

You can either implicitly or expressly accept the changes to your employment contract. Beware not to unintentionally agree to changes by continuing to work under those changes for an extended period of time. That determination is fact specific and depends on various factors, such as length and history of employment. If you have agreed to changes in your employment contract, intentionally or otherwise, you cannot later claim to have been constructively dismissed.

Consider the relationship terminated.

If you are not willing to accept the changes, you can resign by informing your employer that you consider the employment relationship constructively terminated.

Make it known that you do not accept the changes.

If you don’t want to agree to changes to your employment contract then make that known to your employer. This may allow a dialogue between you and your employer that could lead to an amicable resolution for you both or the realization that you are at an impasse.

Let us help you to decide what steps are best for you to take in managing this often delicate relationship.

I have been constructively dismissed – now what?

Once an employment relationship has been constructively terminated you may be able to bring an action against your employer for damages. When calculating what damages, if any, are payable to you the following factors will be taken into consideration:

  • Character of Employment;
  • Length of Service;
  • Age; and
  • Availability of other employment.

Please be aware that any such claim is subject to your duty to mitigate your damages by taking all reasonable steps to find alternative employment. This includes searching for, and possibly accepting similar employment. What constitutes reasonable steps or comparable employment varies depending on individual circumstances. Any amounts received through alternative employment may be deducted from amounts recoverable from the past employer. Similarly, if an employer is able to establish that you failed to mitigate your damages, a Court may reduce (or eliminate) any potential damages awarded.


Employment law is a complex and continuously evolving area of law. It is important for both employees and employers to consider what changes or actions might be perceived as a fundamental change to the employment contract and seek appropriate advice when necessary. Our lawyers can help answer your questions.