SARC’s Human Resources and Labour Relations Newsletter
#28
CONSTRUCTIVE DISMISSAL AND RESIGNATIONS
In this issue, consultants from SARC and MLT Aikins discuss topics of organization change, constructive dismissal, and resignations in the unionized workplace
Contents
Organizational Changes and the Risk of Constructive Dismissal
Amy Gibson & Zoe Johansen-Hill
Constructive Dismissal: The Cost of "Pushing Employees Out"
Bobbi Janzen
Understanding Resignations in The Unionized Workplace
Scott Mostoway
About Bobbi Janzen
Bobbi identifies and fosters strategic partnerships with education, labour, other workforce organizations, and community partners to address Disability Service sector workforce needs and assists with talent supply and demand. She also leads workforce promotion strategies to connect job seekers to the Disability Service sector. Bobbi applies her background in talent acquisition, recruiting, and disability sector advocacy to this role and connects with our Members to learn more about the sector’s workforce needs. Bobbi is available to consult with SARC’s Regular and Associate Members on their workforce development inquiries, including recruitment and retention strategies, job descriptions, HR policies and procedures, compensation/total rewards, and succession planning.
Scott Mostoway SARC Senior Labour Relations Consultant
About Amy Gibson
About Scott Mostoway
Scott can assist SARC’s Regular and Associate Members with a variety of LR/HR issues, including progressive discipline, performance management, and duty to accommodate for unionized and non-unionized organizations. He can also provide specific support in collective bargaining for unionized organizations. Accessing this service is free of charge and can minimize organizational risk. Having a quick check-in or a review done before decisions are made can save you time and money in the end.
Amy Gibson carries on a general labour and employment law practice. She advises employers on a variety of labour issues, including union certification drives, collective agreement interpretation, labour disputes, workplace policies, discipline and discharge, employment contracts, OH&S, workers’ compensation, labour standards and human rights. She has experience with a variety of court and administrative proceedings as well as representing clients before the Saskatchewan Labour Relations Board and in Canada Labour Code unjust dismissal adjudications.
Zoe Johansen-Hill Lawyer, MLT Aikins
About Zoe Johansen-Hill
Zoe Johansen-Hill maintains a labour and employment practice. She has experience assisting employers navigate legal obligations in the workplace and represents employers in litigation matters. Her practice involves a broad scope of employment and labour areas including wrongful dismissal, human rights, employment standards, employment contracts and policies, and occupational health and safety.
Bobbi Janzen SARC Workforce Development Coordinator
Amy Gibson Partner, MLT Aikins
ORGANIZATIONAL CHANGES AND THE RISK OF CONSTRUCTIVE DISMISSAL
SARC Member organizations may be confronted from time to time with the need to adjust their operations to adapt to external and internal changes—whether caused by a reduction in participants, staffing changes, changes to the scope of services, changes in location, or any other operational change. Alternatively, an employer may want to make changes to address poor performance of an employee. Although an employer is entitled to determine the structure of their operations to meet the needs of the organization, it is important to recognize that where such changes impact an employee’s terms and conditions of employment, they may result in what is known as a claim for constructive dismissal.
What is Constructive Dismissal?
Constructive dismissal arises where an employer, without formally terminating employment, makes unilateral and fundamental changes to the terms and conditions of employment, or otherwise acts in such a manner to indicate that it does not otherwise intend to be bound by the employment agreement. In such circumstances, an employee may either accept the changes or resign under protest and claim constructive dismissal.
The Supreme Court of Canada set out the current legal framework for constructive dismissal in Farber v. Royal Trust Co., 1997 CanLII 387 (SCC) and Potter v. New Brunswick Legal Aid Services Commission. Farber, 2015 SCC 10. The Court confirmed that a unilateral and substantial change to an essential term of employment, such as altering duties, status or compensation, can be classified as a constructive dismissal and carry risks for the employer even when acting in good faith.
Claims for constructive dismissal often arise from changes to compensation, job duties, reporting relationships, work location and workplace environment, including allegations of a toxic workplace. Although an employer may be motivated by legitimate business purposes when such changes are made, courts will still consider and assess whether the change in employment amounts to constructive dismissal. Even in cases where the changes were prompted by a struggling employee who is not performing their job duties adequately (i.e. demoting a struggling supervisor to a regular staff position), this may result in constructive dismissal and give rise to reasonable notice entitlements as if the employee had been terminated without cause.
Before making any unilateral changes to the organization, it is therefore important to consider how these changes will impact employees and to consult legal counsel well in advance of the change as there are various ways to mitigate the risk of a constructive dismissal claim, especially when addressed early.
Proactive Measures to Mitigate the Risk of a Potential Constructive Dismissal
While constructive dismissal risks may be a concern for employers contemplating organizational change, there are proactive legal measures that can be taken to help mitigate and reduce the risk of legal action by employees.
When changes in compensation, hours, position or work structure are foreseeable in an employment contract from the outset, employers may reduce their liability exposure by ensuring the terms of the agreement expressly contemplate such changes. For example, if an employer foresees that an employee may only be temporarily
permitted to work remotely, the employer should ensure this is documented clearly within the employment contract and detail the amount of notice required to move the employee to an inoffice working arrangement. Applying a forward thinking approach to contract drafting, with the aid of legal counsel, can help ensure that foreseeable changes are contemplated in the employment agreements and will not give rise to constructive dismissal should they occur.
For significant and unanticipated changes, such as a reduction in hours or compensation, employers may want to provide advance notice of the change/termination of employment to meet notice obligations, with the option for the employee to agree to the change or be terminated upon the conclusion of the notice period.
Similarly, in the case of a struggling employee, rather than unilaterally changing the employee’s job duties, the employer could consider managing the issue through progressive discipline, a performance improvement plan, and/or offering the change in duties as the employee may voluntarily accept a demotion in circumstances where they are struggling to perform.
Where the employment agreement is mutually amended, an employer may be required to offer fresh consideration to ensure that changes in terms and conditions of employment are binding. Fresh consideration refers to a new, tangible benefit exchanged between parties to make an amended or new contract legally binding. This could be an increase in compensation or benefits, or potentially a signing bonus.
Finally, strong workplace policies and safety culture can assist in preventing constructive dismissal claims related to workplace harassment, bullying, or what is often known as a “toxic workplace.” Where a toxic workplace is tolerated by an employer without action, it may give rise to constructive dismissal. Employment legislation requires employers to protect workers against workplace violence and harassment and to investigate and take action where violence or harassment arise. Compliance with these legal requirements will also help avoid constructive dismissal claims.
Constructive Dismissal Trends
There are several employment trends related to constructive dismissal that have arisen over the past year or more. You have likely heard of “quiet
quitting” or the newer coined “quiet cracking” which describes a lack of fulfillment at work due to burnout or dissatisfaction in the workplace. “Revenge quitting” has begun to take the place of “quiet quitting”, where employees fed up with low salaries or lack of raises and few promotions are walking off the job. Other methods of employee protest involve “coffee badging” or “task masking”, which assert an employee taking control of their working lifestyle through minimized in office work or lower levels of productivity. Finally, “resenteeism” has become commonplace, where employees stay in a job due to financial insecurity or a lack of better opportunities and continually resent their employer because of these feelings.
With these rising trends and constructive dismissal remaining an ongoing concern for employers, what can be done? In response to these concerns, employers have multiple avenues to pursue to help mitigate liability and legal action. Clear and consistently enforced workplace policies help form a basis for employee accountability. Policies should be tailored to operational needs and remain aligned with employment legislation and human rights obligations. Performance and responsiveness expectations can be integrated into these policies and established through employment contracts. Again, clear policies which outline evaluation criteria and evaluations that are scheduled regularly will assist in creating thorough documentation to help protect employers. Documentation and transparency are key for employers.
Employers have a duty to understand and properly address issues employees are facing. Are they due to larger institutional challenges such as burnout or mental health? What are you as an employer doing to support employees? There are also human rights considerations which remain central to the duties of an employer. Employers are legally obligated to accommodate employees with disabilities up to the point of undue hardship and must be cautious not to conflate protected grounds with misconduct or lack of motivation.
In sum, legal tools offer a structured and compliant framework for addressing modern disengagement trends, but they must be applied fairly, consistently and with awareness of the broader implications and contexts which today’s employees face. When thoughtfully used, these tools can reinforce productivity and legal compliance, while focusing on employee wellbeing and organizational resilience.
CONSTRUCTIVE DISMISSAL: THE COST OF "PUSHING EMPLOYEES OUT"
Bobbi Janzen SARC Workforce Development Coordinator
Constructive dismissal claims can arise when an employer makes major changes to an employee’s job without their agreement, and those changes are serious enough that the employee feels they have no real option but to resign. The employer may not formally fire the person, but the law can treat the resignation as a termination. What matters is not what the employer intended, but whether the changes fundamentally altered the job.
This can happen in obvious ways, such as cutting pay or demoting someone. But it can also happen more subtly. If an employee’s key responsibilities are taken away, their authority is reduced, or they are left with little meaningful work, the role may no longer resemble the job they were hired to do. Sudden changes to work location, hours, or reporting structure can also create serious problems, especially if they disrupt established family responsibilities or create hardship (ex. inability to travel to a location).
Constructive dismissal is not always the result of a single decision. It can develop over time. A workplace that tolerates bullying, public criticism, exclusion, or ongoing hostility can slowly erode the employment relationship. When concerns are ignored and unfair treatment becomes a pattern, an employee may reasonably conclude that the situation will not improve and decide to leave.
A particularly risky situation arises when changes appear designed to make someone quit. “Pushing someone out” can look like reducing their hours, assigning undesirable shifts, isolating them from the team, relocating them without good reason, or stripping away meaningful projects. Even if nothing is said openly, actions can send a clear
message that the person is no longer wanted. When that happens, a resignation may legally count as a dismissal.
Trying to avoid a formal termination by making the workplace uncomfortable is a short-sighted strategy. Legally, the employer may still owe notice or severance pay, and in some cases, additional damages. But the damage does not stop there. The reputational impact can be significant and long-lasting.
Employees notice when a colleague is being sidelined or forced out. It affects how safe they feel in their own roles. Trust in leadership can drop quickly, and people may begin to question whether decisions are fair or whether they could be next. That uncertainty creates anxiety, lowers morale, and reduces employee engagement.
Team dynamics also suffer. When someone is seen to be “pushed out” instead of managed transparently and respectfully, it can create tension and resentment. High performers often have options. If they see instability or unfair treatment, they may quietly start looking elsewhere. Increased turnover means lost experience, higher recruitment costs, and additional pressure on the employees who remain.
Reputation outside the organization can suffer just as quickly. Former employees talk. They share their experiences with professional networks and on public platforms. An employer known for “forcing people out” may struggle to attract strong candidates. Recruitment becomes harder and more expensive. Retention becomes an ongoing challenge, and this is a difficult cycle to break.
In contrast, handling performance issues or organizational changes openly and fairly builds credibility. Clear communication, proper notice, documented agreements, and respectful conversations make a difference. When employees see that even difficult decisions are handled with honesty and dignity, trust is preserved.
Constructive dismissal is not just a legal concept. It is a warning sign of deeper organizational risk. “Pushing someone out” is not just a dismissal in disguise or a quick fix. It may seem easier in the moment, but it can damage morale, weaken culture, and harm reputation in ways that are far more costly than addressing issues directly and fairly.
UNDERSTANDING RESIGNATIONS IN THE UNIONIZED WORKPLACE
Scott Mostoway SARC Senior Labour Relations Consultant
One right that extends to all employees—from frontline staff up to senior management—is the fundamental right to choose where they work. This means anyone may resign their employment at any time and choose to either work elsewhere or exit the workforce entirely. A resignation is a unilateral decision by the employee to end the employment relationship.
But what happens when there is disagreement about whether a resignation actually occurred?
Elements That Must Be Present for a Voluntary Resignation
To properly classify a resignation as voluntary and intentional, two key elements must be present in all cases:
• A subjective element — the employee must have intended to resign.
• An objective element — the employee must have taken actions consistent with that intention.
This two-part standard exists because some resignations are given in the heat of the moment and do not always reflect an employee’s true intentions. Arbitrators therefore look closely at the steps an employee took after announcing their resignation to determine whether they truly intended to resign and acted upon that intention.
This raises an important question: what if external factors such as duress or a mental health condition influence either an intended or unintended resignation?
The Impact of a Disability on a Disputed Resignation
In some cases, an employee may appear to have resigned, only to later claim that a disability
impaired their judgment. To establish this, the employee must show evidence that a cognitive dysfunction affected their decision-making. This must go beyond simple poor judgment or a desire to reverse a decision after the fact.
Any claimed cognitive impairment must be rationally connected to the resignation process. These situations should be managed strategically: ensure the two-part intention standard is applied while also considering the employer’s responsibility to accommodate.
Resignations Provided Under Duress
Although employees have the unilateral right to resign, issues arise when a resignation is tendered under duress. Arbitration decisions have found resignations invalid—and therefore rescindable— when they were made under employer pressure or the threat of termination.
A four-part test is commonly applied when assessing whether a resignation was made under duress following a disciplinary meeting:
1. Did the employee have notice of the allegations that led the employer to seek a resignation?
2. Did the employee have the opportunity to consult with a union representative?
3. Did the employee have sufficient time to consider their options?
4. Was the resignation offered in the face of a threat of criminal proceedings by the employer?
These factors serve as a reminder that offering an employee the option to resign must be done carefully, ensuring the employee is not placed in a position where their decision could be deemed coerced.
Conclusion
Ensuring that resignations are voluntary, intentional, and free from duress is essential in a unionized environment. By understanding the two-part test for intent, recognizing the impact disability may have on decision making, and being alert to signs of duress, employers can better protect both employee rights and the integrity of the employment relationship.
