What Is Constructive Dismissal in Ontario? Your Rights When Your Job Changes
Constructive dismissal occurs when an employer does not expressly fire an employee but changes or repudiates the employment relationship so fundamentally that the law treats the employee as dismissed.
The issue is not whether a change is unpleasant. The question is whether the employer has breached the employment contract in a sufficiently serious way, or through a course of conduct has shown that it no longer intends to be bound by the contract.
What Is the Legal Test for Constructive Dismissal in Ontario?
The Supreme Court of Canada in Potter v. New Brunswick Legal Aid Services Commission, 2015 SCC 10 confirmed two routes to constructive dismissal.
The first is a unilateral employer act that breaches the employment contract and substantially alters an essential term. The assessment is objective: would a reasonable person in the employee’s circumstances have viewed the essential terms of employment as substantially changed?
The second is a series of employer acts that, considered cumulatively, show an intention no longer to be bound by the employment contract.
The employment agreement matters. A change will not necessarily be a breach if the contract validly authorizes it, or if the employee has agreed to the change. Continued work without objection can also create an argument that the employee accepted the new terms.
What Changes Can Lead to Constructive Dismissal in Ontario?
Depending on the circumstances, constructive dismissal can arise from a significant reduction in salary or commissions, a demotion or substantial loss of responsibilities, a major change to hours or work location, an unauthorized suspension, or serious workplace conduct that the employer fails to address.
No single percentage pay cut or particular job-title change automatically proves constructive dismissal. The significance of the change is assessed in context, including the employee’s contract, compensation structure, duties, status, reporting relationship and the employer’s reason for the change.
A poisoned or harassing workplace can also support a constructive-dismissal claim in sufficiently serious circumstances, particularly where the employer’s conduct or failure to respond forms part of a broader repudiation of the employment relationship.
What Should You Do if Your Employer Changes Your Job in Ontario?
Do not resign reflexively. Constructive dismissal is fact-specific, and an employee who resigns without a sufficient legal basis may be treated as having quit voluntarily.
Preserve the employment agreement, job description, compensation records and communications announcing or explaining the change. Record when the change took effect and how it affects pay, duties, reporting structure, hours, location or working conditions.
A written objection may be important. Depending on the circumstances, an employee may be able to continue working under protest while seeking legal advice rather than immediately resigning. The appropriate response depends on the nature of the breach and the risk of the employer later arguing that the employee accepted the change.
Do not sign a revised employment agreement, compensation plan or resignation letter before understanding how it affects your existing rights.
What Compensation Is Available After Constructive Dismissal in Ontario?
If constructive dismissal is established, the law generally treats the employment relationship as having been terminated by the employer. The employee may then be entitled to applicable ESA termination and severance entitlements and, depending on the employment agreement, common-law reasonable notice or damages in lieu.
Benefits, bonuses, commissions and other compensation may form part of the claim where they would have been earned during the applicable notice period and are not validly excluded by the governing contract or plan.
The employee also has a duty to mitigate common-law damages by making reasonable efforts to find comparable work. In some constructive-dismissal cases, whether the employee must remain temporarily with the employer as part of mitigation can itself become an issue, which is another reason to obtain advice before leaving.
How Lecker & Associates Can Help
Lecker & Associates advises employees across Ontario on termination packages, wrongful dismissal claims, fixed-term contract disputes, and severance negotiations. If your fixed-term contract ended before the agreed end date, early legal review can help determine whether the employer had the right to end the contract, whether the termination clause is enforceable, and whether the offer reflects the full value of the remaining term. Our team of Toronto employment lawyers can be reached at 416-223-5391 or intake@leckerslaw.com for a confidential consultation.
FAQs: Constructive Dismissal in Ontario
Constructive dismissal can arise where an employer unilaterally breaches the employment contract in a way that substantially changes an essential term, or where a course of conduct shows that the employer no longer intends to be bound by the contract.
The evidence usually compares the original employment terms with what the employer changed or did. Employment agreements, compensation records, job descriptions, emails, policy documents and written objections can all be important.
Yes, if the constructive dismissal is established. The law can treat the resignation as a response to the employer’s termination of the contract. But resignation alone does not prove constructive dismissal, so obtain advice before leaving.
There is no universal percentage. The size and duration of the reduction, the employee’s total compensation, changes to commissions or bonuses, the employment agreement and the surrounding circumstances all matter.
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