Constructive Dismissal in Alberta: A Guide for Employees

By Stephen Dugandzic 

Constructive dismissal is a legal concept that protects employees when an employer makes a fundamental change to the job or creates intolerable working conditions, effectively forcing the employee to resign. In Alberta, as in the rest of Canada, the law may treat such a resignation as a termination by the employer. This post explains what constructive dismissal means under Alberta employment law, how it’s determined, examples of when it might occur, how it differs from wrongful dismissal, and practical steps you should take if it happens to you.

What Is Constructive Dismissal?

Constructive dismissal arises when an employer unilaterally does something so contrary to the employment relationship that it forces the employee to quit. In other words, your employer has changed a fundamental term of your job or treated you so poorly that you feel you have no choice but to resign. Under the law, this resignation can be treated as if you were fired without cause. In those cases, the employee’s resignation is legally viewed as a termination by the employer, giving the employee the right to seek termination pay or other remedies for wrongful dismissal.

Legal Tests Used by Courts in Alberta

Alberta courts apply an objective test to determine if a constructive dismissal has occurred. They ask whether a reasonable person in the employee’s position would feel that the employer’s actions substantially changed an essential term of the employment or made continued employment intolerable. Key points in the legal analysis include:

• Unilateral, Fundamental Change: The change must be initiated by the employer (without the employee’s consent) and must affect a fundamental term of the contract. A fundamental term could be your wage/salary, job duties, title/position, work location, or hours of work. If the employer significantly reduces your pay or demotes you, for example, that is a serious change to an essential term.

• Intolerable Work Environment: Constructive dismissal can also occur through a pattern of behaviour rather than a single change. If the workplace becomes “poisoned” or hostile – for instance, persistent harassment, bullying, or abuse by management – a court may find that you were forced to leave. In such cases, the test is whether the employer’s treatment of the employee was so bad that a reasonable person would feel compelled to resign.

• Employer’s Intent Not Required: It’s not necessary to prove the employer wanted you to quit. What matters is the effect of their action. Even if an employer thinks a change is minor or justified, it can amount to constructive dismissal if it fundamentally breaches the employment agreement from an objective standpoint.

• No Acceptance by Employee: If an employer’s significant change or conduct could be a breach, the employee must not have condoned or accepted it. If you continue working too long under the new conditions without objection, a court might decide you implicitly accepted the change. Acting promptly (discussed below) is critical.

Courts in Alberta follow these principles (established by Canadian case law) to decide if your situation meets the threshold for constructive dismissal. If it does, you are legally entitled to remedies just as if you had been formally terminated.

Common Examples of Constructive Dismissal

Many kinds of employer conduct can amount to constructive dismissal if they represent a major change or breach of the employment agreement. Here are some common examples:

• Significant Pay Cut: A unilateral reduction of your wage or salary (especially beyond a trivial amount) is a classic ground for constructive dismissal. For instance, an employer cutting your pay by, say, 20% or more without your agreement is generally considered a fundamental change.

• Demotion or Change in Role: Stripping you of key responsibilities, giving you a lower-ranking job title, or demoting you to a lesser position can be constructive dismissal. Even without a title change, a drastic change in your job duties or status (like reducing a manager to an entry-level role) may qualify.

• Major Change in Hours or Location: Forcing a new work schedule that is very different (e.g. switching you from day shift to graveyard shift permanently) or relocating your workplace far away from the original location, without agreement, can be treated as constructive dismissal. The change must be significant – a minor tweak in shift time or a temporary relocation might not meet the threshold.

• Toxic or Unsafe Work Environment: Allowing or causing a workplace to become hostile, abusive, or unsafe can force an employee to resign. Examples include ongoing harassment by a supervisor, serious verbal abuse, or failing to address workplace dangers. If the environment is so bad that a reasonable person would feel they cannot continue working, it can be a constructive dismissal.

• Unilateral Cuts to Benefits or Overtime: Dramatically reducing or eliminating important benefits (such as earned bonus structures, commission, or health benefits) or cutting your overtime rate or vacation entitlement without consent could be considered a constructive dismissal. Alberta’s rules note that quitting due to a reduction in overtime rate, vacation pay, or other key benefits can trigger constructive dismissal protections .

• Temporary Layoff Without Agreement: In some cases, if you are put on a temporary layoff without a contractual right to do so, you may treat it as a termination. Alberta’s Employment Standards Code does allow temporary layoffs, but courts have held that absent agreement, an unexpected layoff might entitle an employee to claim constructive dismissal or wrongful dismissal.

Note: The change or conduct must be substantial. Minor changes or isolated incidents of unfairness usually won’t qualify. Each situation is fact-specific – the overall impact on the employee is what counts.

Constructive Dismissal vs. Wrongful Dismissal

It’s easy to confuse these terms. Wrongful dismissal is a broader term referring to any termination of employment that is done in breach of the contract or without providing proper notice or pay in lieu of notice. In a typical wrongful dismissal, the employer explicitly fires the employee without just cause and doesn’t give the employee the notice or severance pay required by law. The employee can then sue for damages (usually the pay they should have received with proper notice).

Constructive dismissal is actually one form of wrongful dismissal. It refers to situations where no explicit firing took place – instead, the employer’s actions forced the employee to quit. In a constructive dismissal, the law treats the resignation “as if” the employee was fired by the employer without cause, because of the employer’s fundamental breach of the contract. The end result is the same as a wrongful dismissal: the employee can claim compensation for termination. In fact, if you’ve been constructively dismissed, you would typically pursue a wrongful dismissal claim to recover things like pay in lieu of notice, just as you would if you were outright terminated.

In summary: Constructive dismissal is essentially a subtype of wrongful dismissal. The difference lies in how the employment ends – constructive dismissal is a resignation caused by the employer’s breach, whereas a standard wrongful dismissal is a direct firing without adequate notice or reason. Both give the employee legal grounds to seek damages.

Steps to Take if You Believe You’ve Been Constructively Dismissed

If you find yourself in a situation that you think amounts to constructive dismissal, it’s important to handle things carefully. Here are some practical steps for employees:

• Document the Changes or Treatment: Start keeping a written record of everything relevant. Note the dates and details of any changes to your job (pay cuts, new duties, transfer, etc.) or incidents of poor treatment (harassment, unsafe work orders, etc.). Save emails, memos, new contracts or policies, and write down conversations with your employer (who said what and when). These records will be crucial evidence if you need to prove your case. Alberta Employment Standards advises employees to be “prepared to support their position” if claiming constructive dismissal – in practice, that means having documentation and facts ready.

• Don’t “Accept” the Unilateral Change: If your employer has made a change you consider unacceptable, try not to signal your agreement. Continuing to work under the new conditions for too long can be taken as acceptance of the change. You shouldn’t just quit on the spot in every case, but do raise your objection promptly. For example, if your pay was cut or you were demoted, express (in writing) to your employer that you do not consent to these changes. This can be done diplomatically, such as requesting a discussion or clarification, but it’s important to put your disagreement on record. That way, if you eventually resign, there’s a clear trail showing you did not acquiesce to the new terms.

• Talk to Your Employer (if possible): It’s often best to address the issue internally first. If you feel safe doing so, explain your concerns to a manager or HR: for example, “My hours have been cut in half, which wasn’t what we agreed to. I’m concerned I can’t continue under those terms.” This gives the employer a chance to fix the situation (such as restoring your original terms or addressing the harassment). Be sure to document these conversations (follow up with an email summarizing the discussion). However, if the situation is abusive or obviously beyond repair, you may choose to skip straight to the next steps for your own well-being.

• Seek Legal Advice: Constructive dismissal situations can be complex. It’s a good idea to consult an employment lawyer as soon as possible, before you resign if you can. A lawyer can assess whether your situation truly qualifies as constructive dismissal and advise you on how to resign and claim your entitlements properly. Getting legal advice will help you avoid missteps – for example, a lawyer might suggest you obtain a written confirmation of the change from your employer or help you draft a resignation letter that clearly states you are resigning due to constructive dismissal (which can strengthen your later claim).

• Resign if Necessary, and Do So Carefully: If the situation truly can’t be resolved and your lawyer (or informed judgment) confirms that the changes are fundamental, you will likely need to formally resign to claim constructive dismissal. In your resignation, make it clear (in writing) that you are leaving because of the employer’s changes or conduct. You might say, for example, “I am resigning my position effective immediately. The 25% reduction in my salary and removal of my managerial duties are fundamental changes to my employment terms, which I do not accept.” This kind of statement helps document that you didn’t simply quit voluntarily, but were pushed out by the circumstances. Remember, the timing of resignation matters – generally you should resign within a reasonable period after the breach. If you delay too long, it undermines your claim.

• File a Complaint or Legal Claim: After resigning (or even while still employed, in some cases), you have two main avenues:

1. Employment Standards Complaint: You can file a complaint with Alberta Employment Standards for termination pay if you believe you were constructively dismissed. The provincial authorities can order your employer to pay the minimum termination entitlements (e.g. the Alberta Employment Standards Code requires termination pay or notice based on length of service – up to 8 weeks maximum under the Code). You must file this complaint within 6 months after your last day of employment. Complaints can be submitted online at no cost. This route is generally faster and doesn’t require a lawyer, but it will only get you the minimum amounts defined by law, not any additional damages.

2. Wrongful Dismissal Lawsuit: For full compensation beyond the minimum standards, you may choose to sue your employer for wrongful dismissal due to constructive dismissal. Through a court claim (or negotiation), you could seek common law reasonable notice damages, which for long-service employees are often much higher than the Employment Standards minimum. This process can take longer and may require a lawyer, but it can be worth it if you had a long tenure or high position. Note: You generally cannot double-recover; you would typically choose either the Employment Standards route or a lawsuit. Get legal advice on which path is better for your situation.

• Be Aware of Timelines and Limitations: Acting in a timely manner is crucial. For an Employment Standards complaint, the deadline is 6 months from your last day of work , but it’s best to file as soon as possible. For a court lawsuit, Alberta’s Limitations Act gives a maximum of 2 years from the date of dismissal (which in a constructive dismissal is likely the date you resigned because of the employer’s breach) to start legal action. Missing these deadlines can forfeit your rights. Additionally, as mentioned, don’t wait too long to resign after the triggering event; if you continue working for many months under the new conditions, it may be seen as acceptance, and you might lose the ability to claim constructive dismissal.

By following these steps – documenting everything, seeking advice, and knowing the proper channels – you will put yourself in the best position to handle a constructive dismissal. Every case is different, so use your judgment and consult professionals when in doubt.