Constructive dismissal occurs when an employer substantially alters, without the employee’s consent, an essential term of the employee’s contract of employment. This can give rise to litigation and financial liability for an employer. However, for a unilateral change by an employer to constitute constructive dismissal, the change must be a fundamental one going to the root of the contract. The ultimate question is whether a reasonable person in the same situation as the employee would have felt that the essential terms of the contract were being substantially changed.

In a recent case, a municipal employee with 20 years of seniority was transferred to a new position in the same location, requiring the same qualifications, and remunerated at the same pay grade. What changed was the nature of the job itself. Originally, the employee’s work involved “hands-on computer engineering applications” to address traffic control issues in real-time. She had a number of people reporting to her and supervised the work of student interns. As a result of both restructuring and improvements to traffic control technology, the employee was transferred to a position that mainly involved writing Requests for Proposals for traffic initiatives. The Court found that the employee’s job changed from one that was “operational” to “administrative” in nature. This was a fundamental, unilateral change. Therefore the employee was constructively dismissed.

In the course of 20 years, the organization and technological infrastructure of a company is bound to undergo significant changes. How do you adjust an employee’s duties in line with a company’s evolving practices, without the changes being “fundamental” such that you could be liable for constructive dismissal? When transferring an employee, there are two perspectives to consider when determining if the new position constitutes a fundamental change to their employment: the “big picture” and the individual employee.

In this case, the subject matter that the employee dealt with was consistent between the two positions – she was working in the area of traffic management. But as the Court pointed out, she was no longer involved in day-to-day operations and instead dealt with the long-term administrative organization of the department. From the “big picture” perspective, this was a fundamental change to one’s employment.

The key perspective is that of the individual employee. If a reasonable person in that employee’s position felt that the fundamental terms of their employment were changed upon being transferred to a new position, they will be considered constructively dismissed. Before imposing a job transfer, it may be helpful to get a sense of the employee’s perspective, along with legal counsel, to determine whether they feel – or the court may rule – that a change in their duties is ‘fundamental’ to the terms of their employment.

Written with the assistance of William Goldbloom, articling student.