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Constructive dismissal occurs when an employer unilaterally and substantially alters a fundamental term or condition of an employment contract, creating an intolerable situation that forces the employee to resign. Although the employee initiates the resignation, the law treats it as an involuntary termination.
Constructive Dismissal generally falls into two categories: monetary changes & non-monetary changes.
Monetary Changes
Non-Monetary Changes
Case Law Example: Significant Increase in Workload
In Damaso v. PSI Peripheral Solutions Inc. (2013 ONSC 6923), the Ontario Superior Court held that a significant increase in workload may constitute a fundamental change to the employment relationship and give rise to constructive dismissal. In that case, the employee's request for increased compensation, reflecting the substantial increase in responsibilities beyond his original position, was denied by the employer.
Recent Trend: Return-To-Office Mandates
A return-to-office mandate may also give rise to a constructive dismissal claim if it is not implemented properly. An employer's right to require an employee to return to the workplace may be preserved through an enforceable term in the employment agreement or a subsequent written agreement. However, remote work may become an implied or fundamental term of employment where the employee has worked remotely for an extended period and no end date or recall provision was specified.
This principle was illustrated in Byrd v. Welcome Home Children's Residence Inc. 2024. The plaintiff had worked remotely from Belgium for over a year while employed as a manager of a care home. Her working hours were significantly reduced, and many of her responsibilities were reassigned to an on-site manager after she declined to return to in-person work. There was no written agreement specifying when the remote-work arrangement would end or reserving the employer's right to require her return to the workplace. The court ultimately found that requiring the employee to return to the office under those circumstances constituted constructive dismissal.
The Test for Constructive Dismissal
To successfully claim constructive dismissal, an employee must establish that:
If an employee detects warning signs of constructive dismissal:
An employee who successfully establishes constructive dismissal may be entitled to:
Court Jurisdiction and Limitation Period
Constructive dismissal claims may be pursued in the Ontario Small Claims Court where the amount claimed does not exceed CAD $50,000, making the process generally more cost-effective. In most cases, a claim must be commenced within two years of the date on which the cause of action arose.
Disclaimer: This information is not intended to be construed as a legal advice, but strictly for your information only. Please contact Trustworthy Legal Services for an independent legal advice in your particular situation. The first consultation is required prior to the retainer of your case.
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Constructive dismissal occurs when an employer unilaterally and substantially alters a fundamental term or condition of an employment contract, creating an intolerable situation that forces the employee to resign. Although the employee initiates the resignation, the law treats it as an involuntary termination.
Constructive Dismissal generally falls into two categories: monetary changes & non-monetary changes.
Monetary Changes
- A substantial cut in salary (usually 10% or more), a significant reduction in commissions or bonuses;
- A significant reduction or removal of benefit entitlements.
Non-Monetary Changes
- Changed duties and status: Removing core responsibilities, significantly diminishing an employee's authority , or/and implementing a major shift in reporting structure;
- Substantial reduction in work hours or a major change of shifts;
- Significant increase in workload;
- Geographic Relocation: Forcing an employee to move to distant geographic location, or demanding a remote work report to a distant in-person location;
- Hostile Work Environment: The employee is subject to harassment, discrimination or abusive conduct from the employer or co-worker(s);
- Refusal to accommodate: A failure to accommodate can trigger a fundamental alternation of employment terms or create intolerable work environment;
- Unapproved Layoffs: Imposing a temporary layoff where the employment contract does not expressly permit it;
- Forced to quit or be fired: Threatening termination unless the employee voluntarily resigns.
Case Law Example: Significant Increase in Workload
In Damaso v. PSI Peripheral Solutions Inc. (2013 ONSC 6923), the Ontario Superior Court held that a significant increase in workload may constitute a fundamental change to the employment relationship and give rise to constructive dismissal. In that case, the employee's request for increased compensation, reflecting the substantial increase in responsibilities beyond his original position, was denied by the employer.
Recent Trend: Return-To-Office Mandates
A return-to-office mandate may also give rise to a constructive dismissal claim if it is not implemented properly. An employer's right to require an employee to return to the workplace may be preserved through an enforceable term in the employment agreement or a subsequent written agreement. However, remote work may become an implied or fundamental term of employment where the employee has worked remotely for an extended period and no end date or recall provision was specified.
This principle was illustrated in Byrd v. Welcome Home Children's Residence Inc. 2024. The plaintiff had worked remotely from Belgium for over a year while employed as a manager of a care home. Her working hours were significantly reduced, and many of her responsibilities were reassigned to an on-site manager after she declined to return to in-person work. There was no written agreement specifying when the remote-work arrangement would end or reserving the employer's right to require her return to the workplace. The court ultimately found that requiring the employee to return to the office under those circumstances constituted constructive dismissal.
The Test for Constructive Dismissal
To successfully claim constructive dismissal, an employee must establish that:
- The employer's unilateral action breached an express or implied term of the employment contract;
- The change was substantial and detrimental to the employee's working conditions;
- The employee did not consent (expressly or implicitly) to these changes;
- The employee objected to the changes within a reasonable time period.
If an employee detects warning signs of constructive dismissal:
- Object explicitly: Express your objection to the major change to your employer, preferably in writing, within a reasonable period of time;
- Keep thorough records: Save emails, texts, and letters regarding the fundamental change in work conditions; document all changes and events that contributed to making the workplace intolerable.
- Seek legal advice: Employees should consult with a legal professional before resigning.
An employee who successfully establishes constructive dismissal may be entitled to:
- ESA Minimums: If your employment contract restricts termination pay to Employment Standards Act (ESA) minimums, you may be entitled to one week of pay per year of service (up to 8 weeks), and potentially severance pay (one week per year of service, capped at 26 weeks), after five years of service, if one of the following criteria is met:
- The employment of 50 or more employees is severed within a six-month period due to a permanent discontinuance of all or part of the employer's business.
- The employer has an annual payroll of $2.5 million or more.
- Common Law Reasonable Notice: Entitlements are based on the employee's age, length of service, position, and job availability, usually ranging from max. 1 month per year up to 24 months of total compensation. There were rare circumstances that awarded more than 24 months in recent cases.
- Aggravated or Punitive Damages: These may be pursued if the constructive dismissal is linked to bad-faith conduct discrimination, harassment, or other particularly egregious conduct by the employer.
Court Jurisdiction and Limitation Period
Constructive dismissal claims may be pursued in the Ontario Small Claims Court where the amount claimed does not exceed CAD $50,000, making the process generally more cost-effective. In most cases, a claim must be commenced within two years of the date on which the cause of action arose.
Disclaimer: This information is not intended to be construed as a legal advice, but strictly for your information only. Please contact Trustworthy Legal Services for an independent legal advice in your particular situation. The first consultation is required prior to the retainer of your case.
Follow on Facebook, LinkedIn, Instagram & Twitter.
Like or/Share this article if you find it is useful.
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