In employment law constructive dismissal, also called constructive discharge or constructive termination, occurs when an employee resigns as a result of the employer creating a hostile work environment Since the resignation was not truly voluntary, it is, in effect, a termination For example, when an employer places extraordinary and unreasonable work demands on an employee to obtain their resignation, this can constitute a constructive dismissal.
A constructive dismissal leads to the employee’s obligations ending and the employee acquiring the right to make claims against the employer.
The employee may resign over a single serious incident or over a pattern of incidents. Generally, a party seeking relief must have resigned soon after one of the constructive acts.
United States law
In the United States, constructive discharge is a general term describing the involuntary resignation of an employee. There is no single federal or state law against constructive dismissal in general. From a legal standpoint, it occurs when an employee is forced to resign because of intolerable working conditions which violate employment legislation, such as:
- Family and Medical Leave Act of 1993 (FMLA)
- Equal Pay Act of 1963 (EPA)
- Change in schedules in order to force employee to quit (title 12)
- Americans with Disabilities Act of 1990 (ADA)
- Genetic Information Nondiscrimination Act of 2008 (GINA)
- Age Discrimination in Employment Act of 1967 (ADEA)
- Title VII of the Civil Rights Act of 1964 (Title VII)
- Any state employment law
- An employer showing favoritism to another employee without reason or explanation
The burden of proof in constructive dismissal cases lies with the employee.
The Equal Employment Opportunity Commission has provided a 3-part test to determine whether or not a constructive discharge has occurred: (1) a reasonable person in the complainant’s position would have found the working conditions intolerable; (2) conduct that constituted discrimination against the complainant created the intolerable working conditions; and (3) the complainant’s involuntary resignation resulted from the intolerable working conditions.
In California, the California Supreme Court defines constructive discharge as follows:
An employer’s breach of the employment contract releases the employee from their obligation to perform under the contract, and thus allows them to treat themselves as dismissed without notice. Hence, a constructive dismissal always becomes a wrongful dismissal.
Changes to the employment relationship
Typically, the first way to claim constructive dismissal involves an employer making substantial changes to the employment contract, such as:
- a demotion;
- altering the employee’s reporting structure, job description or working conditions;
- lowering an employee’s compensation;
- changing hours of work;
- imposing a suspension or leave of absence; and
- relocating the employee’s workplace.
In addition, failure on the part of an employer to provide employment standards (e.g. overtime pay, vacation pay, etc.), can result in a constructive dismissal.
Nevertheless, for an employee to have a successful case for constructive dismissal, the employer’s breach must be fundamental. What is “fundamental” depends on the circumstances, and not all changes to the employment relationship give rise to a constructive dismissal. For example, administrative, i.e. non-disciplinary, suspensions might not amount to a constructive dismissal if imposed in good faith and justified by legitimate business reasons (i.e. lack of work). As well, a small reduction in salary, in tough times, and administered rationally, might not be a constructive dismissal.
Toxic work environments
An employee may also be able to claim a constructive dismissal based on an employer’s conduct, rather than a change to a specific or implied term of the employment contract. Here, the second way to claim constructive dismissal examines whether the employer’s (or employee of the employer) course of conduct, or even a single incident, demonstrates an intention to no longer be bound by the written or implied employment contract. An example of this kind of constructive dismissal is a “toxic work environment”. In this regard, if a work environment is so poisoned that a reasonable person wouldn’t be expected to return, then constructive dismissal is likely.
A toxic work environment is classically defined as unjustified criticism as well as vague and unfounded accusations of poor performance, especially where authority and respect with co-workers had been seriously undermined and compromised. Another example of toxic work environment is where the employer fails to prevent workplace harassment.