HR Tip: Did You Know that Changing an Employee’s Working Conditions May Amount to Constructive Dismissal, Allowing them to Sue for Damages?
Employers who change an employee’s working conditions without reasonable notice or their consent may be risking a lawsuit. The employee’s claim would be for “constructive dismissal.” Constructive dismissal arises when an employer makes a unilateral and fundamental change in a term or condition of an employment contract without providing the employee with reasonable notice of the change.
Examples of changes amounting to constructive dismissal include: reducing salary, reducing working hours, demotions, employer harassment, material changes in job descriptions, and substantial changes in the geographic location of the job.
How to Avoid Liability
At heart, constructive dismissal is a violation of the employment contract. So the key is to avoid making changes that are unilateral, or without reasonable notice. Here are four key approaches employers may take to avoid liability:
- Use written employment contracts, which include provisions allowing the employer flexibility to make changes to important conditions, and that limit the period of “reasonable notice.”
- Where no employment contract exists, or where the change proposed is not one contemplated by the existing contract, motivate employees to enter into a written contract, or to agree to amend the existing contract.
- Remember that contracts require “consideration” to be effective. This means employers cannot avoid liability by simply having employees sign a paper agreeing to the change. The employee must receive something (“consideration”) that demonstrates they received something in return for the change. This is particularly critical for employers restructuring because of economic challenges.
- Where the foregoing three approaches may not work, the employer can effect the change by giving “reasonable notice.” How much notice is “reasonable” is a legal issue that depends on may circumstances.
In the final analysis, lawsuits typically arise when employees feel they have not been treated with respect. This is less likely to happen when you engage employees in change processes and seek their input in key decisions.
For more on this subject, contact HR on Target (Connie Carrillo, MIR, CHRP)
Tel (613) 389 3265
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