Constructive Dismissal and Demotion

A demotion is a significant change to an employee’s job that could cause them to suffer financial or psychological distress. If the demotion was not in a reasonable manner or without justification, an employee may be entitled to statutory or common law damages for constructive dismissal. However, it is important to note that demoting an employee can sometimes be done legally and without the risk of a claim. In addition, the strength of a constructive dismissal claim will depend on the individual circumstances of the case.

In order to be constructively dismissed, an employer must have created and maintained intolerable working conditions that would make it impossible for the employee to perform their job properly. It must also have been aware of these intolerable conditions, or should have been reasonably aware of them. For this reason, it is very difficult for employees to prove constructive dismissal when they are not happy with the general workplace environment but are unable to pinpoint specific incidents or issues.

Employers often try to get around the risk of being charged with constructive dismissal when they demote an employee by ensuring that any changes to their compensation are expressed within their employment contract. These clauses will usually allow employers to change an employee’s salary or even their position as long as they give the employee notice and an opportunity to accept these changes. However, if the employer is not clear about these terms or tries to limit their legal risks by only expressing these changes in their contract, then it is likely that a breach of contract has occurred.

Constructive Dismissal and Demotion

Ultimately, the court will decide whether a particular situation constitutes constructive dismissal and award an employee damages accordingly. The court will take into account the length of time that the employee worked for their employer, the nature of their job and any other relevant factors.

The best way to determine if you have been constructively dismissed is to speak with an experienced lawyer about your individual situation. The lawyer will be able to advise you as to whether or not you have grounds to file a claim and, if so, the strength of that claim.

If your boss formally fires you, you can make a claim for constructive dismissal and be entitled to severance pay if you have two years of service with the company. However, it is not uncommon for an employer to ‘fire’ you in a more subtle and indirect way by demoting you or introducing undesirable alterations to your job which make it intolerable and leave you no choice but to quit your employment.

Examples of these intolerable conditions include a significant decrease in workplace responsibilities or the removal of a primary area of work, such as confining a plant superintendent’s duties to yard foreman responsibilities. Typically, these changes are coupled with reduced compensation or job titles.