Several months ago, I wrote an article about terminations of employment without cause and applicable notice periods.
I suggested that many employees do not receive the amount of pay in lieu of notice (sometimes called “severance”) they are entitled to when their employment is terminated without cause.
Generally speaking, a reasonable notice period is the amount of time it will take for an employee to find similar employment elsewhere. As one might expect, that time period is different depending on the circumstances of the individual employee, but it is usually longer than the minimum notice requirements set out in the Saskatchewan Employment Act.
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There are some circumstances where an employer is not required to pay any severance, including where there is cause for termination.
Terminations for cause are quite rare, however, and this is because the misconduct must be relatively serious to support a “just cause” firing.
For example, theft, fraud or violence in the workplace may be grounds for immediate termination for cause. Less serious misconduct, such as repeated tardiness or poor performance, can be considered cause for termination, but the behaviour generally needs to be well supported with clear records, warnings, opportunities to improve and repeated failures to do so. Employers rightly are not required to pay severance where there is cause for termination.
Resignation is also a circumstance where the employer is not required to pay any severance. When an employee resigns from their employment, they are required to provide their employer with two weeks’ notice of their last day.
There are some exceptions to this rule, such as where the employee’s health or safety is in danger and no notice is required, or where the relationship is governed by an agreement that requires a lengthier notice period.
When an employer receives a resignation from an employee, they may opt to pay out the notice period rather than having that employee continue to work until their stipulated last day, but no other pay in lieu of notice is required when an employee voluntarily resigns.
However, what happens when an employee resigns in circumstances where they felt they were forced or pressured to resign? Does that employee receive nothing? Not necessarily.
There is a principle of employment law called “constructive dismissal” that applies to involuntary resignations. Essentially, the law does not allow employers to pressure an employee to resign by making unwanted changes to their employment.
A constructive dismissal occurs when an employer makes unilateral and material changes to the employment agreement that negatively affects the employee. Often the imposed change is related to lower compensation but other changes, such as a demotion, a change in location without notice, a shift in regular work hours or a significant change to duties and responsibilities can also be characterized as material changes that could give rise to a constructive dismissal claim. A hostile or toxic work environment leading to resignation might also be considered a constructive dismissal.
When an employee experiences unwanted and material changes to their employment situation, resignation is sometimes their only option. To successfully claim that a constructive dismissal has occurred, however, an employee is required to act relatively promptly. This is because if they wait too long, they will be taken to have acquiesced to the change that occurred.
If an employee successfully claims constructive dismissal, the remedy is that the employer will be ordered to pay the employee what they would have been entitled to had they been terminated without cause. That is, the employee will receive pay in lieu of reasonable notice of termination. In some circumstances, this can be a substantial sum.
Constructive dismissal claims are not always easy to prove and the facts of each situation vary.
Sometimes it is very clear that a constructive dismissal has occurred, such as where there is a demotion and a significant pay cut.
Other times, however, it is not so clear, such as where an employer made a change in an attempt to accommodate an employee who was experiencing difficulties or in response to a workplace dynamic that required action or because the employee agreed to the change.
Like many areas of law, the outcome is not always easy to predict. This is why it is important for both employee and employer to keep good records and seek legal counsel promptly.
If you are an employee and you are feeling pressured to resign your employment, you should seek legal counsel to be sure you understand your rights.
Similarly, if you are an employer and you are facing a claim of constructive dismissal, an employment lawyer can help you understand the nuances of the law and how to navigate the legal system if a formal claim is made.
Faith Baron is a lawyer with Stevenson Hood Thornton Beaubier LLP in Saskatoon. She can be contacted at fbaron@shtb-law.com. This article is provided for general informational purposes only and does not constitute legal or other professional advice.
