Difference between Wrongful Dismissal and Constructive Dismissal

Wrongful Dismissal vs. Constructive Dismissal: Understanding the Difference

Wrongful dismissal and constructive dismissal are two distinct legal concepts in employment law that can have significant implications for both employers and employees. While both involve the termination of an employment relationship, they arise from different circumstances and have different legal consequences.

Wrongful Dismissal

Wrongful dismissal occurs when an employer terminates an employee’s employment without just cause or reasonable notice of termination. Under Ontario common law, “just cause” is a high legal standard that requires the employer to demonstrate that the employee’s conduct was so serious as to warrant immediate dismissal without notice or financial compensation (severance package).

Common scenarios of wrongful dismissal include:

Termination without just cause: The employer fails to provide a valid reason for the termination of employment, or alternatively, asserts just cause for dismissal without justification.
Failure to provide reasonable notice: The employer fails to give the employee sufficient notice of termination or adequate financial compensation (severance package), and there is no valid justification for providing only the minimum severance package (such as in an employment contract termination clause).
Discrimination or workplace harassment: The termination is based on discriminatory grounds, such as race, gender, age, religion, or disability, or unlawful reprisal (retaliation).

Constructive Dismissal

Constructive dismissal occurs when an employer makes significant changes to the terms and conditions of employment, making the working conditions intolerable or unacceptable. This can include:

Demoting the employee to a less desirable position.
Significantly reducing the employee’s salary or benefits.
Temporary layoff without an employment contract or employee’s permission to justify it.
Employee suspension an employment contract or employee’s permission to justify it.
Increasing the employee’s workload or changing their job duties significantly.
Serious workplace harassment, discrimination or bullying of the employee (hostile work environment).

When an employee resigns in response to these changes, they may be able to claim constructive dismissal.

Key Differences Between Wrongful Dismissal and Constructive Dismissal

Feature	Wrongful Dismissal	Constructive Dismissal
Initiator	Employer (formally with a termination letter)	Employer (indirectly)
Notice Period	Employer fails to provide adequate notice of termination, or wrongly asserts just cause for termination	Employee involuntarily resigns due to intolerable conditions (this should only be with careful consideration and advice of an experienced Ontario employment lawyer)
Remedy	Severance package and potentially additional damages (if necessary)	Severance package and potentially additional damages (if necessary)

Factors Affecting Reasonable Notice (or an Employee’s Severance Package):

Length of service: The longer an employee has been with the employer, the longer the reasonable notice period.
Age: Older employees may be entitled to a longer notice period.
Position and salary: Higher-level positions and higher salaries may warrant longer notice periods.
Economic conditions: Economic downturns may impact the availability of comparable employment, leading to longer notice periods.

However, it is important to note that the above factors only apply if an employee is successful in providing their wrongful dismissal claim, and the employer cannot rely on an employment contract termination clause to otherwise limit (or restrict) an employee’s financial compensation entitlements (severance package).

Mitigation of Damages

Both in wrongful dismissal claim and constructive dismissal claims, the employee has a duty to mitigate (reduce) their damages or financial losses resulting from the end of their employment. Among other things, this means that the employee must take reasonable steps to find new employment and, if they come upon a comparable job opportunity with similar terms and conditions of employment, accept a new job offer (unless they have a valid legal reason not to accept the job).

Book a Consultation with an Employment Lawyer in Toronto

At Bune Law, we understand and are familiar the complexities of workplace law and are committed to helping both employers and employees navigate these challenges. Whether you are an employer or employee dealing with employment contracts, workplace disputes like a wrongful dismissal or constructive dismissal, or simply need guidance on your rights and obligations for a severance package review and negotiation, our experienced employment lawyer is here to assist you.

Book a confidential consultation with our Toronto employment law firm to protect your legal rights to understand your options and protect your rights.

Why Choose Bune Law When You Need an Ontario Employment Lawyer?

Experience in all areas of workplace law, including wrongful dismissal claims, constructive dismissal claims, severance package reviews, severance package negotiations, discrimination and human rights disputes, and employment contract reviews.
Proven track record of successfully resolving workplace disputes through negotiation, mediation, and employment litigation.
Compassionate and personalized approach to each case, ensuring tailored solutions that meet your specific needs.

If you need a Toronto employment lawyer who is committed to delivering strong results and proactive solutions, please contact Bune Law online or by phone today at 647-822-5492.