Resignation v. Constructive Dismissal?

In most cases, an employee who resigns from employment is not legally entitled to severance. However, the distinction between resignation and constructive dismissal has become increasingly complex in employment litigation. In the recent case of Persaud v Telus Corporation, the Ontario Court of Appeal provides useful guidance regarding the effect of conduct in determining whether a resignation is actually a constructive dismissal, thereby entitling the employee to severance.

Case Overview

Ms. Persaud was an employee at Telus for seven years before her resignation in 2004. Soon after resigning, she asserted that she was constructively dismissed on two grounds: increased work hours and a toxic work environment.

At trial, the court dismissed all of Ms. Persuad’s claims. Justice Glustein held that to demonstrate a constructive dismissal claim, the reason for resignation must relate to either a unilateral change to an essential term of employment or a series of acts demonstrating the employer’s intention to no longer be bound by the terms of the employment contract. In this case, the evidence pointed to Ms. Persaud’s resignation being motivated by solidarity with her former co-worker’s dissatisfaction with management, and not because of her increased work hours or a toxic work environment.

The Appeal is Dismissed

Ms. Persuad appealed the trial judge’s decision. In dismissing all grounds of appeal, the Court of Appeal found that the trial judge made no errors of law and no palpable and overriding errors. Regarding the constructive dismissal claim, the Court held that the trial judge was correct in requiring a causal link between the breach of contract and the damages suffered by Ms. Persaud. The Court of Appeal emphasized that if an employee consents or acquiesces to changes to an essential term of their employment contract, the changes will not amount to a constructive dismissal. As Ms. Persaud remained silent as to an increase in working hours and alleged toxic work environment, her claim was dismissed.

This case provides employers with clarity on whether changes in workplace conditions will be found to amount to a constructive dismissal claim from an employee. The Court of Appeal firmly rejects the suggestion that an employer needs to read the minds of their employees when altering working conditions. If an employee is not willing to remain in the altered/modified position, his or her objection needs to be made clear to his or her employer. Otherwise, the employee will be found to have condoned or accepted the change to the employment relationship.

Lessons for Employees

For employees, this case illustrates that its important to not stay silent is there are any significant changes to the conditions of employment or he or she will risk being found to have consented or accepted the change. Rather, an employee should communicate their objection to the change to his or her employer at the earliest opportunity. It would also be advisable to seek advice from an employment law professional if any significant change (or changes) occurs to the conditions of employment. Any missteps by an employee could be fatal to constructive dismissal claim.