Constructive Dismissal in Ontario: Understanding Your Rights

What is Constructive Dismissal?

Under Ontario employment law, the phrase “constructive dismissal” describes situations where the employer has not directly fired the employee. Rather the employer has through its unilateral actions:

failed to comply with an employment contract in a major respect
unilaterally changed the terms of employment, or
expressed a settled intention to do either thus forcing the employee to quit

Sometimes, a constructive dismissal is considered a “disguised dismissal” or “quitting with cause,” because it often occurs in situations where the employer offers the employee the alternative of:

leaving, or
submitting to a unilateral and substantial alteration of a fundamental term or condition of their employment

In other words, it is essentially a termination of employment, even though the employee is the one who submits the resignation and the employer does not formally or officially terminate employment (as would be the case in a wrongful dismissal claim). This occurs when an employer decides to make significant changes to the employment contract without the employee’s consent, making the working conditions intolerable or unacceptable.

Whether or not there has been a constructive dismissal is based on an objective view of the employer’s conduct. It is not merely on how the employee perceives the situation.

Unlike a direct wrongful dismissal, where an employer explicitly terminates an employee’s employment, constructive dismissal is a more subtle form of wrongful termination of employment. However, the legal consequences for the employee are similar, although the legal requirements to prove succeed in the employment dispute.

Examples of Constructive Dismissal

Understanding what constitutes a constructive dismissal can be complex and will vary depending on the specific circumstances of each employee’s situation. However, here are some common examples:

Significant reduction in salary or benefits: A substantial cut in pay or the removal of key benefits without the employee’s agreement may be considered a constructive dismissal.
Demotion or change in job responsibilities: If an employee is demoted to a significantly lower position or given substantially different and less challenging work without their consent, it may amount to a constructive dismissal.
Unreasonable change in work location: Requiring an employee to relocate to a significantly distant location without reasonable notice or compensation can be grounds for constructive dismissal.
Workplace Harassment or a toxic work environment: If an employee is subjected to an extremely hostile or intolerable work environment due to harassment, bullying, or discrimination, they may have grounds for constructive dismissal.
Breach of contract: A serious breach of the employment contract by the employer, such as failing to pay wages or providing benefits as promised, can also constitute constructive dismissal.
Temporary Layoff: if an employment contract does not explicitly allow an employer to place an employee on a temporary layoff, or if the layoff terms deviate significantly from the requirements of the employment contract or employment legislation, it could amount to a constructive dismissal.

The key point is that not every change in employment terms will amount to a constructive dismissal. The legal test is whether the changes are so significant that they fundamentally alter the employment contract.

Legal Risks for Employees

While constructive dismissal can be a powerful legal tool for employees, it is essential to understand the potential risks involved.

Difficulty proving the case: The employee bears the burden of proof in a constructive dismissal claim. This means they must demonstrate that the employer’s actions were so severe that a reasonable person would feel compelled to resign.
Mitigation of damages: If an employee is successful in proving constructive dismissal, they have a duty to mitigate their damages. This means they must actively seek new employment and cannot unreasonably refuse suitable work.
Loss of employment benefits: Resigning from a job, even if due to constructive dismissal, can result in the loss of certain employment benefits, such as financial compensation in the form of a severance package (termination pay and severance pay) that an employee would typically receive if there was a wrongful dismissal.
Cost of employment litigation: Employment law disputes can be expensive, and employees may need to incur legal fees to pursue a constructive dismissal claim.

Proving a Constructive Dismissal Claim

To establish a constructive dismissal claim, an employee typically needs to prove the following:

A fundamental change to the employment contract: The employee must demonstrate that the employer made significant changes to the terms of their employment without their consent.
Intolerable working conditions: The employee must show that the changes made the work environment so difficult or unpleasant that a reasonable person would feel compelled to resign.
Timely and cautious resignation: The employee is typically required by the courts to resign within a reasonable period of time after the changes are implemented to avoid being seen as accepting the new terms. However, this should always be done after consulting with an experienced Ontario employment lawyer to protect employee rights (otherwise, an employee may be without a job and if they do not prove a constructive dismissal, will not have much to show for it).
Mitigation of damages: The employee must take reasonable steps to find new employment to minimize their financial loss.

Document everything: It is crucial for employees to maintain detailed records of any major changes to their employment terms, as well as any incidents of workplace harassment or mistreatment. This documentation will be invaluable if they decide to pursue a constructive dismissal claim.

Employee Rights and Responsibilities

Employees have the right to a safe and respectful workplace without harassment or bullying; an employer who abides by their obligations under the employment contract; and as well as the right to fair compensation and working conditions. If an employee believes they have been constructively dismissed, they have the right to seek legal advice and potentially pursue a claim for wrongful dismissal.

However, employees also have responsibilities. They must act reasonably in response to changes in their employment and cannot simply resign without considering their options. It is essential to consult with a Toronto employment lawyer to assess the situation and determine the best course of action.

Conclusion

Constructive dismissal is a complex area of employment law. If you believe you may have been constructively dismissed, it is important to seek legal advice from an Ontario employment lawyer as soon as possible before you take any action on your own in dealing with your employer. An experienced employment lawyer can help you understand your legal rights, assess your options, and protect your interests.

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.