I have worked full-time as a receptionist for the past year and a half. I was temporarily laid off because of COVID-19. I am now being told to start working half-days. I can’t afford to work there only part-time. Can I use ‘constructive dismissal’ and still get Employment Insurance benefits until I find a replacement job that offers full time? Or what about ‘frustration of employment'? [My boss] is telling me that we’re all suffering and I have to just accept the change to my amount of hours. I am willing to look for full-time work while on EI.
The first answer
Nicola Watson, lawyer, Pink Larkin, Halifax
A claim for constructive dismissal may arise when an employer unilaterally changes a key aspect of the employment relationship, for example significantly reducing an employee’s hours and/or pay. When an employee has been constructively dismissed, the law treats them as if they had been terminated.
There are significant risks in pursuing a constructive dismissal claim instead of returning to work during or immediately following the COVID-19 pandemic. It is important that employees get legal advice regarding their specific circumstances.
Employees may face difficulties finding alternative employment, and if their Record of Employment indicates they resigned, it is unlikely they will be able to access Employment Insurance or the Canada Emergency Response Benefit.
These are unprecedented times and we are not yet sure how the courts will treat temporary wage and hour reductions. In Ontario, the new Employment Standards Act Regulation 228/20 may operate to preclude certain claims for constructive dismissal arising out of the pandemic. Courts could also conclude an employment contract was frustrated, relieving the employer of any obligation to give notice, or imply a contractual term permitting temporary changes to the employment contract as a result of the pandemic.
Finally, employees who claim constructive dismissal have a duty to take reasonable steps to find alternative work. This duty often includes an obligation to accept an offer to return to work under changed conditions. While the employee can still bring a constructive dismissal claim, returning to work can significantly reduce the damages recoverable against their employer. The purpose of damages is to help bridge you to new employment when you’re not provided sufficient notice that your employment is ending. If the employee fails to accept re-employment, their claim may be dismissed, or they may suffer a significant reduction to any monetary award owing to a failure to mitigate their losses.
The second answer
Shibil Siddiqi, partner, Progressive Barristers, Toronto
Constructive dismissal can occur when an employer fundamentally changes the terms of employment, including by significantly reducing an employee’s hours of work or wages. This allows the employee to treat their employment as terminated, and to claim Employment Insurance and seek pay in lieu of notice of termination from the employer. EI or the Canada Emergency Response Benefit (CERB) is not available if an employee voluntarily quits, but remains available in constructive dismissal cases.
A new regulation passed by the province on May 29 disallows constructive dismissal claims under the Employment Standards Act for all COVID-19 related layoffs and reductions of hours of work or wages. This regulation would limit your ability to seek termination entitlements under the ESA. However, it would not prohibit a claim for EI/CERB or a common law constructive dismissal claim before the courts. Frustration of the employment contract would likely not apply or be advisable in your circumstances; asserting it could potentially lead to a termination without any compensation to you.
Most EI claims have been temporarily replaced by the CERB, which pays a maximum of $2,000 per month – some $300 less than the maximum EI. After six months of CERB, eligible workers can still apply for EI if needed. You can also collect CERB on top of your employment income, provided you are not earning more than $1,000 a month. If this applies to your situation, an option may be to continue working and to apply for CERB to supplement your decreased employment income.
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