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Know What is Constructive Dismissal

Constructive dismissal occurs when a party to the employment contract changes the fundamental terms of an employment contract unilaterally.  In other words, constructive dismissal arises when the employer changes the terms of an employment contract without involving employees.

Constructive dismissals are typically malicious and they amount to wrongful dismissals, and your employer should be sued for targeting you unfairly, intending to terminate your services. You can get free legal counsel through a Brampton labour lawyer consultation if you are wrongfully dismissed.

Fundamental Breach

Constructive dismissals are typically never beneficial to employees and even if they were beneficial, consent must be given by the employee. Unfortunately, most employees don’t complain when the terms of their contracts are changed.

An employer is considered to have repudiated and breached the contract entirely. Breaching the contract potentially terminates or brings it to an end and the employee can forthwith file a claim for wrongful dismissal or breach of contract.

Wrongful dismissal lawsuits are resolved through common law under the principle of reasonable notice which states that an employee should be given notice before terminating their services. A fundamental breach can include any of the following actions:

  • Pay cut that reduces the wage, commissions, bonuses, or benefits without the employee’s express consent;
  • Changing an employee’s title unilaterally;
  • Changing an employee’s duties without notifying the employee;
  • Reduction of manpower which increases workload;
  • Changing working hours;
  • A toxic working environment.

Contract Law and Employment Contract

Employment contracts are based on the law of contract because the nature of employment relationships between employers and employees are contractual. A contract must either be verbal, written, or a combination of both, and highlight the terms of engagement.

Some terms in a contract are fundamental while others are merely supportive. The fundamental terms are the essential and basic features of the agreement that facilitate the functioning of the contract. Changing the fundamental terms of an employment contract potentially destroys the contract.

Fundamental Terms of an Employment Contract

The terms to be included in an employment contract can vary by state, type of work, and industry but the following terms are common in all employment contracts across the board.

  1. Employee & Employer Identification

The details of the transacting parties–employer and employee, must be specified, such as their full names, contact details, and others.

  1. Effective Date

The contract becomes effective on the date it is signed by the transacting parties. If the employee signs the contract on the 5th day of the month and the employer signs it on the 10th day of the month, the contract becomes effective when the last person signs, the 10th  day of the month in this case.

  1. Remuneration and other Benefits

An employment contract must include all details related to remuneration, such as wage rate, pay dates, and the benefits that an employee is entitled to. The benefits may be specific or unique to a particular employee, or general (given to all employees).

  1. Nature of Employment

An employment contract must specify the classification of an employee; permanent or casual–and the applicable wage rate.

  1. Duties and Expectations

The duties of a new hire must be specified in their contract to avoid redundancy and promote efficiency in the workplace. Also, the consequence of defaulting should be highlighted.

  1. Working Days & Time

Your employment contract should be specific on your working days and time to avoid exploitation. Some employers subject their workers to overtime work without pay which is illegal according to labour law.

  1. Work for Hire

Most employment contacts include “work for hire” clauses stating that the works of employees are the property of the business.

  1. Termination

The termination clause specifies when termination can be triggered, such as defaulting duties, failing to meet targets, breaching the terms of the employment contract– and notices required from either party.

  1. Dispute Resolution

Disputes in the workplace are inevitable but the most important thing is how they’re handled. Your contact must address dispute resolution which could be through mediation, arbitration, or litigation depending on the situation at hand.

  1. Applicable Law or Jurisdiction of the Contract

This section highlights where the contract is effective. In other words, the state where any cases related to an employment contract can be litigated.

Changing the Terms of an Employment Contract Legally

Entering into a contract involves two or more people and the same principle should be used when changing the terms of the contract. Also, there has to be consent and consideration. Otherwise, changing the fundamental terms of an employment contract without involving an employee is a breach of contract.

Effecting new employment terms without employee consent and consideration may be unenforceable, and renders the original contract null and void.


When new employment terms that you don’t ascribe to are imposed, that is a potential constructive dismissal.  You should act fast because keeping quiet is considered acceptance of the change of your terms of service.


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