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Fired in Alberta: Demotions, Reorganizations and Constructive Dismissal

Organizations sometimes wish to demote staff, make changes to their organizational structure, change pay or create other changes in people's jobs. Many employees and employers are not aware that if the demotion or changes are big enough (or “material”) and not agreed to by the employee, that the situation might actually involve Constructive Dismissal. Constructive Dismissal occurs in Alberta when an employer makes a unilateral, material change to an indefinite contract of employment.

Whether or not a certain situation falls into this category depends upon the scope of the change and can be very fact specific, but in the event this happens the employee has the right to resign and sue for Constructive Dismissal, but only if the change has actually occurred. Just discussing a potential change with an employee may not be enough.

The Supreme Court of Canada addressed the issue of Constructive Dismissal in the case Potter v. New Brunswick Legal Aid Services Commission. You can read that case here:

If you actually agree to the change, you can lose your ability to seek legal remedies.

The damages that an employer is liable for in this instance are the same as if the employer had fired the employee without cause, and depends on the Bardal factors: see our article on how severance is calculated:

The employee also has the duty to mitigate: see our article on mitigation.

If you would like to discuss how this might affect your situation, please contact us:

The information contained in this article is not legal advice. No solicitor client relationship is formed through this article. The reader is encouraged to retain counsel for advice in these matters.

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