Change In Remuneration

Let's assume that you are a sales person in a company earning strictly commission. You have been quite successful and have had excellent performance appraisals. For some reason your employer removed your largest account and over night, your income was cut in half. There is no way you can make this income up off your other accounts. What are your options?

You can do nothing, accept the situation and continue working for your employer. Or you can refuse to accept this position, "resign" and claim as against your employer for damages for constructive dismissal.

A constructive dismissal has the same effect as a firing, but occurs differently. It typically involves a situation where the employee feels it would be untenable to continue working for that employer. Examples of constructive dismissals include employer-harassment, wrongly being accused of theft, a change in reporting structure, a demotion or being placed on probation during your employment, to name just a few examples. A constructive dismissal is defined at law as a unilateral change (by the employer) to a fundamental term of the employment contract. In the hypothetical case outlined as the beginning of this article, the fundamental change was the drastic reduction in your employment income which change you did not agree with.

When you are considering whether to advance a claim for constructive dismissal, there are a few things you must understand. If you continue to stay within the changed environment for any length of time, you may be estopped from later suggesting that you were fired when the company changed the terms of your employment. In other words, time is of the essence when considering advancing a claim for constructive dismissal. Further, claiming constructively dismissal is a one-way street. When you claim that the company terminated your employment constructively, you no longer work there. You do not return to your office and your pay cheque will likely be stopped. You may well be without any funds unless a quick settlement can be achieved. Sometimes however, companies will play hard ball in constructive dismissal cases. Your position at law may be strong but the company refuses to settle until just before trial. All these things should be considered before you advance a claim for constructive dismissal.

Finally, if you advance a claim for damages for constructive dismissal you will be required to make reasonable and diligent efforts to "mitigate" your damages or replace your income. You need to understand how to do that and keep track of it, should your matter go to trial.

If you believe that you have no alternative but to resign or your employer has made an unacceptable change to a significant term of your employment contract, please contact me before making any rash moves at work. Not all changes to your employment contract will result in a constructive dismissal so you are well advised to discuss it with me first.