Constructive Dismissal Ultimate Guide
What is Constructive Dismissal?
Read Time: 30 - 40 mins
This is the ultimate guide to Constructive Dismissal and a complete guide regarding suing for constructive termination.
Employment Law Constructive Dismissal happens when an employer unilaterally makes a fundamental change to a material term or condition of an employment contract. If you think you may have been treated unfairly, you might be considering suing for constructive dismissal. If you're thinking about doing this, you need to understand the language that was used when you were fired or being constructively dismissed.
For an employer, a mishandled constructive dismissal claim will cost you dearly. For an employee, in a constructive dismissal case, you want to retain an experienced constructive dismissal lawyer to maximize your recovery.
As an employer or an employee, it makes sense to consult with constructive dismissal lawyers from time to time especially if you live in the Toronto area. Constructive dismissal Lawyer a phone call away! FREE Initial Consultation.
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Click here to check out the wrongful dismissal ultimate guide - a dismissal claim for those who are wrongfully terminated by their employer.
1 - What is Constructive Dismissal?
Constructive Dismissal COVID Announcement!!
Please note that laws related to layoffs, furlough have changed during COVID-19. Please click here to go to the COVID-19 page to learn more.
Constructive Dismissal - A Quick Summary
Constructive dismissal is an important component of employment law. A Constructive Dismissal case is highly technical, a constructive dismissal lawyer in Toronto can help.
In employment law context, Constructive dismissal is defined as a contractual breach where an employer, by words or conduct, unilaterally makes a fundamental change to a material term or condition of an employment contract without obtaining the consent of the employee.
Constructive Dismissal are frequently tied to issues such as layoff, discrimination against disabilities. Constructive dismissal happens, ACT immediately!!
A Constructive Dismissal Toronto Lawyer can help. No-Win-No-Fee for constructive dismissal cases.
Constructive dismissal may occur through substantial, unilateral changes to essential employment terms such as compensation (salary, benefits, or bonus), job responsibilities, reporting functions within the company hierarchy, working conditions, hours of work, the term of employment, or the employee’s location of work.
A constructive dismissal, in employment law context, might occur even if there’s no breach of a specific employment term in the employment contract; rather, constructive dismissal occurs where the employer’s overall conduct indicates it no longer intends to be bound by the employment contract, for example, by a series of actions that cumulatively makes the employee’s position intolerable.
You can claim constructive dismissal under both common law and under the Employment Standards Act (ESA). The ESA incorporates by reference the common law test for constructive dismissal.
Constructive Dismissal vs. Wrongful dismissal vs. Unjust Dismissal
Constructive Dismissal happens when an employer, by words or conduct, unilaterally makes a fundamental change to a material term or condition of an employment contract.
Wrongful dismissal is a similar yet completely different concept. Wrongful dismissal occurs when an employee is dismissed, or terminated, by their employer, WITHOUT just compensation. There are two types of wrongful dismissal claims:
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Termination Without Cause: Terminates employment without cause yet refuses to compensate the employee adequately.
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Termination for Cause: Inappropriately dismisses an employee for cause and fails to pay any compensation.
Click here to learn more about Wrongful Dismissal.
Unjust Dismissal is completely different than Wrongful Dismissal or Constructive Dismissal. Unjust Dismissal is ONLY available to federally regulated employees under Division XIV - Unjust Dismissal of Part III of the Canada Labour Code. Click here to learn more about Unjust Dismissal.
Time is Of Essence In a Constructive Dismissal Case
The courts have generally given employees a reasonable time frame after the change to consider their options. If the employee fails to act within that time frame and treat the contract as terminated, the employee is deemed to have acquiesced to the change, and the claim of constructive dismissal is thus extinguished.
Time is crucial, and if you wait too long, your prospects of collecting damages will be diminished, and you may even be prohibited from doing so by law.
Call a constructive dismissal lawyer to book a constructive dismissal lawyer consultation as soon as you suspect that you might have a claim of constructive dismissal. Call us now at 647-849-6582 or Contact Us if you have any questions or inquiries regarding constructive dismissal.
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Constructive Dismissal Examples
1. Unfair Performance Targets & Toxic Working Environment
Unfair Performance Targets: Making it extremely difficult for a person to do his or her work successfully by expecting an employee to achieve unreasonable performance objectives is one of the most common reasons for constructive dismissal.
In a toxic workplace, the employer would typically micromanage the employee's daily tasks, pick on little mistakes, hide or minimize the employee's accomplishments, and require the employee to document everything he or she does.
All of these measures are intended to compel the employee to resign from his or her position so that the employer is not required to pay a severance package.
2. Some Other Common Reasons for Constructive Dismissal
Constructive dismissal is highly fact-specific, and it necessitates a thorough understanding of the applicable employment laws. Here are some common examples of constructive dismissal:
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Paying an employee wrong wages or lowering their pay without their consent or agreement.
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Failure to pay a commission or altering the way a commission is earned without the employee's permission.
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Significantly modifying an employee's job duties, responsibilities, or obligations without consent or agreement.
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Unauthorized demotion of an employee
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Giving an employee an overburdened workload, which is likely to produce failure, stress, or anxiety.
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Suspending an employee who DOES NOT have a temporary layoff provision in their employment contract.
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Significantly changing an employee's working environment in such a manner that the employee's ability to perform their job successfully is seriously compromised.
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Constant pressure or intimidation from supervisors, managers, or even other board members, making it very difficult, if not impossible, for the employee to carry out his or her work duties.
How Do You Prove Constructive Dismissal?
Constructive dismissal discussion here only applies to non-unionized working environment. In unionized environments, collective agreements provide for employees’ rights and responsibilities, and union workers’ concerns are to be addressed through their unions and the grievance processes in place.
Whenever there’s any notable change in the working circumstances, employers often argue that NO fundamental breach of contract occurred and that they acted appropriately in accordance with the contract.
An Employee, on the other hand, will argue that a serious breach of the employment contract has occurred, compelling him or her to resign.
Before quitting your job and pursuing a claim for constructive dismissal, you should consider all of your options.
What an Employee Needs to Do to Prove Constructive Dismissal
Employees must show that a breach occurred, while employers must show that this was not the case and that the resignation was voluntary. In any case, resigning is not something to be taken lightly. Before taking that final step, you should seek legal advice from an experienced constructive dismissal lawyer.
Each constructive dismissal claim is unique. The Court has found a case of constructive dismissal under the following circumstances:
1. Subject an employee to a temporary layoff when the employment contract DOESN'T have a layoff provision allowing the employer to do so.
2. Altering the established work responsibilities of an employee substantially.
3. Significantly reduce an employee's salary, even if only temporarily, without the employee's permission.
However, please notes that the Court has NOT found a case of constructive dismissal under the following circumstances:
1. Dispute over the method for determining a bonus suggested by an employer.
2. An unpleasant working environment if the activity complained of does not, objectively, amount to harassment.
3. Suspend an employee until a substantial misconduct has been properly investigated.
4. The decision of the employee to withdraw from the employment contract for reasons unrelated to a fundamental change.
5. Change an employee's working hours to an earlier start time and punish an employee for insubordination for failure to comply.
The Legal Test for Constructive Dismissal – A Brief Summary
Constructive dismissal arises when an employer, by words or conduct, unilaterally makes a fundamental change to a material term or condition of an employee’s employment contract.
When it comes to Constructive Dismissal, the employee has the burden of proof to showcase that the acts of the employer were in violation of the contract's provisions.
When an employer (1) unilaterally changes an express or implied term of an employment contract in a way that a reasonable person in the employee's shoes would interpret as substantially altering an essential term of the contract, or (2) when the employer otherwise acts in a way that would lead a reasonable person to conclude that the employer no longer intends to be bound by the contract, the employer commits a breach of contract, which allows the employee to consider himself or herself constructively dismissed and to seek monetary compensation accordingly.
A breach of an explicit term is usually easier to prove than a breach of an implied term.
A breach of an explicit term occurs when an employer cancels a contract's benefits, eliminates defined job responsibilities, imposes a pay decrease, imposes an arbitrary suspension, or fails to maintain safe working conditions.
A breach of implied conditions may be more difficult to prove, but any bad faith behaviour that destroys the employee-employer relationship of trust and confidence without good reason would most likely qualify.
Under the first branch of the test, constructive dismissal may occur when essential employment terms such as compensation (salary, benefits, or bonus), job responsibilities, reporting functions within the company hierarchy, working conditions, hours of work, the term of employment, or the employee's location of work are changed significantly and unilaterally.
Under the second branch of the test, no specific breach of employment terms is required; rather, constructive dismissal occurs when the employer's overall conduct indicates that it no longer intends to be bound by the employment contract, for example, through a series of actions that cumulatively make the employee's position intolerable.
Click here to learn more about the legal test for Constructive Dismissal and Contractual Repudiation.
Related Constructive Dismissal FAQs:
2 - Where to Sue for Constructive Dismissal & What's the Time Limit?
Choosing where to sue for Constructive Dismissal is always a source of great frustration.
It is critical that you hire a constructive dismissal lawyer in Toronto or an constructive dismissal lawyer near me to help you get through this difficult time as smoothly as possible. There are numerous legal forums to choose from when looking for where to sue for constructive dismissal.
Before claiming for damages, you MUST first decide whether you want to quit your job.
1. Quit To Sue For Constructive Dismissal
You MUST quit before you can sue for constructive dismissal. It’s a risky business. But if your employer's treatment of you amounts to a fundamental breach of contract (i.e. going to the root of contract formation), you are entitled to file a constructive dismissal claim against your employer in Court after you resign.
This fundamental breach is shaped by the explicit contractual terms, as well as the implied terms of relationship of trust and confidence between the employer and the employee.
The employee bears the burden of proof to demonstrate that the employer has breached the employment contract.
A breach "goes to the root of the contract" when it has the effect of depriving the innocent party substantially of the benefit he expected to receive under the contract, regardless of whether the party in breach intended to deprive the other of that benefit.
Resignation Letter or Notice to Employer
One of the most important steps for an employee who wishes to resign as a result of constructive dismissal is to inform the employer of the contractual breach. There cannot be a constructive dismissal if there was no fundamental breach of contract prior to the resignation.
While a resignation letter is not a prerequisite in filing a constructive dismissal suit, it is STRONG evidence that the employee quit due to the employer's serious breach of contract.
An employee who wishes to make a claim of constructive dismissal should include in their resignation letter a statement stating why they feel they have no choice but to resign.
It is also a good idea for an employee to give a thorough explanation of why they are quitting to the business.
A breach of contract can sometimes take the form of a series of events or activities.
Even if the most recent incident may not constitute a fundamental breach on its own, a series of occurrences or actions may be combined to create a fundamental breach.
How Long Can An Employee Wait Before Quitting?
An employee must typically resign from his or her employment within a "reasonable" period following the employer's unilateral change of contractual terms to properly claim constructive dismissal.
If the employee does not resign within that time frame, the employee will be deemed to have acquiesced to the change.
The length of time an employee has to decide whether or not to accept the change varies depending on the kind of change that triggered the employee's right to claim constructive dismissal and the employee's specific circumstances.
An employee whose salary has been significantly reduced, for example, may be compelled to make a quick decision.
An employee whose job duties have been significantly altered, on the other hand, would most likely have more time to try out the new role before being compelled to make a definitive decision.
The Obligation of a Constructively Dismissed Employee to Accept Re-employment
Existing law in Ontario says that if the new employment contract is fundamentally different than the original one, the employee has no duty to accept the "re-employment."
The most essential question is whether or not the new alternative employment is substantially similar to the original one.
If an employee is forced to accept a 30% pay cut or is demoted from a managerial position to a clerical one, the "re-employment" is unlikely to be substantially similar in the eyes of the Court.
2. Do I have to Quit My Job to Claim Damage?
You are not obliged to leave your employment in Ontario before making a claim for damages.
While you're still working, you may file a complaint to one of the administrative tribunals. It makes no difference whether you quit your job, as long as you submit the complaint within the time period.
You may submit a complaint with the Workplace Safety and Insurance Board (WSIB), the Human Rights Tribunal of Ontario (HRTO), or the Ministry of Labour (MOL).
However, before bringing a Constructive Dismissal case in Small Claims Court or Superior Court, you MUST resign.
3. Legal Venuses Available and Time Limit to Sue
The following are the various legal venues accessible to workers who have been constructively dismissed:
A - Workplace Safety and Insurance Board (WSIB)
Time Limit to File Complaint: 6 Months within the Incident
Limitation: Only available for certain type of cases.
Under the Workplace Safety and Insurance Act (WSIA), an employee’s civil claim for constructive dismissal that is based on an allegation of workplace harassment may be statute barred in some situations making WSIB the only available legal forum.
Please read the article below to learn more:
WSIB is the forum of choice for many. Section 13 of the WSIA provides for entitlement under the insurance plan for chronic mental stress and traumatic mental stress, where a worker is entitled to benefits under the insurance plan for qualified mental stress arising out of and in the course of the worker’s employment. In these cases, the worker is entitled to WSIB benefits as if the mental stress were a personal injury by accident.
Click here to learn more about how to file a complaint to WSIB.
B - Human Rights Tribunal of Ontario (HRTO)
Time Limit to File Complaint: 12 Months within the Incident
Limitation: Only available for certain type of cases.
In Ontario, the Human Rights Code (The Code) expressly prohibits workplace discrimination and workplace harassment because of race, ancestry, place of origin, colour, ethnic origin, citizenship, creed, sexual orientation, gender identity, gender expression, age, record of offences, marital status, family status or disability. But HRTO will only entertain discrimination and harassment based on protected grounds, mentioned above.
Click here to learn more about how to file a complaint to the HRTO.
C - Ministry of Labour (MOL)
Time Limit to File Complaint: 12 Months within the Incident
Limitation: Only available for certain type of cases.
You can claim under Occupational Health and Safety Act (OHSA) if you have been terminated in Reprisal for trying to enforce the rights protected by OHSA.
OHSA requires employers to provide employees with a healthy and safe working environment that is free from discrimination in the workplace and harassment in the workplace. And an employee who is terminated by the employer for trying to enforce OHSA protections can file a reprisal complaint against the employer with the Ontario Labour Relations Board (OLRB).
Click here to learn more about how to file a complaint to OLRB for a reprisal complaint.
Time Limit to File Complaint: 2 years within the Incident
Limitation: Only available for certain type of cases.
You can file a claim to the Ministry of Labour, Ontario Branch, under the Employment Standards Act if you believe that your employer is owing you wages. Do note that if you claims includes claims for workplace harassment, then a ESA claim is probably not for you.
Click here to read more about what’s your protection under the ESA.
Click here to learn more about how to file a complaint to Ministry of Labour.
Time Limit to File Complaint: 2 years within the Incident
Advantage: Much higher damage rewards as compared to other forums, almost all types of cases can be filed to the Court.
Disadvantage: Slow & Costly, and if you lose, you have to pay for the legal fee of the other side. In addition, you MUST quit your job before suing for Constructive Dismissal in Courts.
The filing of a constructive dismissal action in Court is reserved for the most serious cases, where the damages awarded in one of the other administrative tribunals listed above are inadequate.
Or if your circumstance WILL NOT fit into any of the other tribunals, you will be forced to take the matter to Court.
Unfortunately, we have encountered far too many instances when an employee has no option but to bring a constructive dismissal lawsuit in Court since the deadline to file in one of the respective statutory forum has expired.
The majority of cases filed with the Court system will be settled at the mediation / settlement stage to reduce cost.
Whether your lawsuit is tried in Small Claims Court or Superior Court is determined by the amount of damage you seek.
In Ontario, the maximum amount you may sue your employer in Small Claims Court for constructive dismissal is $35,000. If the amount is more, you must take the matter to the Superior Court.
HTW Law - Employment Lawyer is conveniently located right next to the intersection of Highway 401 and Highway 404 with a huge parking lot. You may view our Google Map here.
FREE initial employment law consultation with an experienced employment lawyer for qualified employment law cases!! We handle sensitive employment law clients’ information with care. Call us now at 647-849-6582 or Contact Us Now if you have employment law questions or inquires or want to book an appointment for an employment lawyer consultation.
Related Constructive Dismissal FAQs:
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3 - Why You Need A Constructive Dismissal Lawyer?
If you've been the victim of constructive dismissal, you're not alone. While this time in your life may be terrifying, a Toronto constructive dismissal lawyer can work with you to help you fight back and take control of your life once again.
Constructive dismissal happens often, and proving that you were compelled to resign is our goal. We'll work with you to understand your career situation, and talk about what happened that forced you to quit and sue for constructive dismissal. We'll go over the issues that you may have had at work, how they were handled, what circumstances led to your constructive dismissal.
Usually time is of the essence in an employment law constructive dismissal case. If the employee fails to act within a reasonable amount of time and treat the contract as terminated, the claim for constructive dismissal will be extinguished. An experienced constructive dismissal lawyer will likely prove a make-it-or-break-it move in many constructive dismissal suit.
We'll examine the circumstances of your employment and work with you to discover how your employer violated employment law and /or breached the employment contract that compelled you to resign. It's key to give us as much information as possible so that we can build a strong case against your former employer.
We are often able to settle out of court as we can show your employer that he or she did something unlawful. This may result in your employer giving you a settlement or reinstating your job. We'll handle the back-and-forth negotiations needed to get you what you deserve.
We understand that going through a constructive dismissal in Toronto can be heartbreaking, and we're here to help you regain your life by carrying out the necessary actions. You know your employer should have breached the contract, but confronting your employer on your own may be stressful. We have the resources to put you on equal footing with corporate behemoths.
If you've are a victim of constructive dismissal, it's essential that you reach out for help ASAP. You DON'T have to fight this alone. Don't wait!! Time is of the essence.
No-Win-No-Fee for constructive dismissal cases. Call us now at 647-849-6582 or Contact Us Now if you have any inquiry regarding constructive dismissal or you want to book an appointment with us for a no obligation constructive dismissal lawyer consultation.
4 - The HTW Law – Employment Lawyer Approach
HTW Law - Employment Lawyer is a full-service employment law firm in Toronto that also offers employment law services near me to residents of various communities.
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Core Beliefs at HTW Law – Employment Lawyer
At HTW Law - Employment Lawyer, we believe in taking a client-centered approach and are dedicated to developing long-term relationships with our clients while providing employment law services and practical legal advice tailored to their specific needs.
We value every client who visits our employment law Toronto office, even if it is just for a lawyer consultation with an employment lawyer. Our clients aren't just file numbers or cash register receipts; they're living, breathing people in our minds and hearts.
We are not a personal injury firm that also practices employment law because we think it is profitable. We like helping people, which is why we founded HTW Law.
No one at our firm will put a client under pressure to settle an employment law case quickly so that we can laugh all the way to the bank, nor will we make up a plethora of fees and charges and bill you as "out-of-pocket costs."
We are passionate about employment law and keep ourselves up-to-date by attending seminars, conferences, and staying current on employment law cases and legislation.
We want you to succeed in your employment law litigation because we believe that word-of-mouth advertising based on your success stories is the most effective form of advertising.
It's simple. Good employment law Legal Services = happy client.
The HTW Law – Employment Lawyer Advantage
At HTW Law – Employment Lawyer, we provided free employment law consultation to employees in need, and we offer no-win, no-fee counsel in qualified employment law cases, which means that we don't get paid unless and until you get paid. You can rest assured that you are in capable hands, especially given that our success is dependent on your recovery.
We are well-versed in employment laws and human rights laws and have extensive experience in various aspects of employment law practice at HTW Law - Employment Lawyer.
If you have been a victim of workplace harassment, workplace discrimination, age discrimination, disability discrimination, marital status discrimination, or other forms of discrimination prohibited by the Human Rights Code, we can MAKE SURE that the human rights issues are properly addressed in addition to your severance pay, constructive dismissal or wrongful dismissal claims.
HTW Law - Employment Lawyer has the necessary professional expertise to successfully protect your employment rights. At HTW Law – Employment Lawyer, we have a team of medical professionals, accountants, and other experts at our disposal to produce medical reports, financial reports and damage assessments for you when your employment law litigation calls for it.
Experience
Experience counts, and we are prepared to go to court if a resolution cannot be achieved.
Client-Orientated
We listen. And from listening to your needs and wants, we formulate our legal approaches.
Full Range Service
We are a full-service employment law firm. We'll take care of it if it is employment law related.
Experience
We know how much your case is worth based on our experience and previous Court judgments in similar situations, and we'll work hard to get you there while paying attention to your needs and desires.
We Care for You
We understand how tough it is for you to lose your job. We will offer you with confidence, respect and support in a relaxing environment. A kind gesture, a cup of coffee, or something trivial can sometimes be the missing link in rapport building.
FREE initial employment law consultation with an experienced employment lawyer for qualified employment law cases!! We handle sensitive employment law clients’ information with care. Call us now at 647-849-6582 or Contact Us Now if you have employment law questions or inquires or want to book an appointment for an employment lawyer consultation.
5 - The Legal Test for Constructive Dismissal
What is Contractual Repudiation
The concept of constructive dismissal originates from the contract law concept of contractual repudiation. Contractual Repudiation occurs when one party, by act of conduct, either explicit or implied, indicates "an intention to abandon or refuse performance" of an employment contract.
It’s a fact-driven question, requiring one to look at the actual evidence to determine whether the party’s actions indicate that he or she no longer intends to continue with the contract. Thus, many constructive dismissal cases are decided on purely factual grounds.
A party who attempts to exercise rights he or she does not have under the contract will generally be taken to have repudiated. For the same token, if the party’s actions amount to an attempt to impose new terms or conditions upon the other party, then this may amount to repudiation.
Distinction between Contractual Repudiation and Breach of Contract
Repudiation may occur before the time for performance has arrived (anticipatory breach), at the time for performance, or after performance has commenced.
A Breach of Contract occurs when there’s non-performance or defective performance at the time performance is due. The remedy for a breach of contract is an action for damages, and, if the breach "goes to the root of the contract", termination of the contract at the election of the innocent party.
The Legal Test for Constructive Dismissal
A constructive dismissal arises when, although there is no formal dismissal, an employer’s conduct establishes an intention to no longer be bound by the employment contract.
An employee is generally only successful on a constructive dismissal claim if he or she can prove, on an objective assessment, that the impugned change to the employment contract was unilaterally imposed by the employer, that the employee did not accept or condone the change, and that the change was significant.
In its landmark ruling of Potter v New Brunswick Legal Aid Services Commission, 2015 SCC 10, the Supreme Court of Canada cited the Court’s leading authority on constructive dismissal, Farber v Royal Trust Company, [1997] 1 SCR 846, and confirmed there are two branches for constructive dismissal claims:
1. The employer unilaterally makes a fundamental or substantial change to a material term or condition of an employee’s employment contract (“Branch # 1”).
2. The employer’s cumulative acts or conduct, taken together, demonstrates that the employer no longer intends to be bound by the contract (“Branch # 2”).
BRANCH # 1
Branch # 1 of the test for constructive dismissal entails a two-step analysis (Potter, at para. 37)
1. The employer’s unilateral change must be found to objectively breach an express or implied term of the employment contract.
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This is the objective element of the Branch # 1 analysis
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“[T]o qualify as a breach, the change must be detrimental to the employee.”.
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“If an express or an implied term gives the employer the authority to make the change, or if the employee consents to or acquiesces in it, the change is not a unilateral act and therefore will not constitute a breach.”
2. The employer’s breach must substantially alter an essential term of the employment contract. The question to ask is whether “at the time the [breach occurred], a reasonable person in the same situation as the employee would have felt that the essential terms of the employment contract were being substantially changed” (Farber, at para 26)
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This is the subjective-objective element of the Branch # 1 analysis
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“A breach that is minor in that it could not be perceived as having substantially changed an essential term of the contract does not amount to constructive dismissal.” (Potter, at para. 39)
BRANCH # 2
Under Branch # 2 of the test for constructive dismissal, the employee is not required to point to any specific substantial change to a material term of employment. Rather, the question is whether the employer’s course of conduct, viewed in light of all of the circumstances, “would lead
a person to conclude that the employer no longer intended to be bound by the terms of the contract”. Such a course of conduct “amounts cumulatively to an actual breach”. (Potter, at para. 42)
The second branch of the constructive dismissal test is similar to that of step two of Branch # 1 in that the perspective is a subjective-objective one. In another word, either a single incident that’s very serious in nature or a series of incidents that are not serious on its own, but cumulatively is very serious.
A constructive dismissal will be established if the requirements of either branch are met. The onus is on the employee to establish a constructive dismissal on a balance of probabilities.
As the Supreme Court observed in Potter, in each case, determining whether an employee has been constructively dismissed is a “highly fact driven exercise” in which the court must determine whether the changes are reasonable and whether they are within the scope of the employee’s job description or employment contract.
What Employer's Conduct Amounts to a Constructive Dismissal?
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Temporarily laying off an employee where there is no right to do so in the employment contract is constructive dismissal. See e.g. Bevilacqua v. Gracious Living Corp., 2016 ONSC 4127; Kurt v. Idera Inc., 2016 ONSC 3799 (Div. Ct.); Michalski v. CIMA Canada, 2016 ONSC 1925; Robinson v. H. J. Heinz Company of Canada LP, 2018 ONSC 3424; Gent v. Strone Inc., 2019 ONSC 155.
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Substantially altering an employee’s established job duties is constructive dismissal. See e.g. Morgan v. Vitran Express Canada Inc., 2015 ONCA 293; Robinson v. H. J. Heinz Company of Canada LP, 2018 ONSC 3424.
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Substantially decreasing an employee’s salary, even if on a temporary basis, is constructive dismissal. See e.g. Ziten v. Sadie Moranis Realty Corp., 2015 ONSC 7987; Crescent (1952) Limited v. Safety Insurance (1959) Limited, 2019 ONSC 931
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Suspension without Pay, especially when the employer suspend employee prematurely without any proper investigation into misconduct being conducted. See e.g. Filice v. Complex Services Inc., 2018 ONCA 625.
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Employer's Unilateral Change of Oral Promise on work arrangements, particularly if the oral promise was honoured for a long time prior to the unilateral change. See e.g. Hagholm v. Coreio Inc., 2018 ONCA 633.
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Poisoned work environment / Failure to maintain a healthy and safe Working environment. See. e.g. Colistro v. Tbaytel, 2019 ONCA 197.
Please read the following post to learn more about successful consecutive dismissal cases in recent years:
What Employer's Conduct DOES NOT Amounts to a Constructive Dismissal?
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Disagreeing with employer’s proposed formula for calculating a bonus is not necessarily constructive dismissal, when formula was not stipulated in the employment contract. See e.g. Chapman v. GPM Investment Management, 2017 ONCA 227.
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An unhappy work environment is not necessarily constructive dismissal if, objectively speaking, the conduct complained of does not rise to the level of harassment. See e.g. Lemesani v. Lowerys Inc., 2017 ONSC 1808.
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Suspending an employee pending an investigation into substantial misconduct is not necessarily constructive dismissal. See e.g. Pierro v. Hospital for Sick Children, 2016 ONSC 2987.
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An employee's decision to resign for reasons unrelated to a fundamental change to the employment contract does not entitle him or her to damages for constructive dismissal. See e.g. Persaud v Telus Corporation, 2017 ONCA 479.
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Changing an employee’s hours to an earlier start time is not necessarily constructive dismissal. See e.g. Lawrence v. Norwood Industries Inc., 2016 ONSC 6072; Peternel v. Custom Granite & Marble Ltd., 2018 ONSC 3508.
Interplay Between Employment Contract Amendment, Constructive Dismissal and Wrongful Dismissal
According to Wronko v. Western Inventory Service Ltd., 2008 ONCA 327, when an Employer attempts to amend an employment contract containing terms disadvantageous to the employees, the employees have three options:
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Accept the change in employment contract;
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Reject the change and sue for constructive dismissal; or
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Reject the new term and insisting on the original terms of employment.
If an employee has accepted the new contractual conditions, he or she cannot resign and claim constructive dismissal.
An employer may NOT compel an employee to accept contract modifications without providing sufficient consideration.
New contractual modifications may be unenforceable due to a lack of consideration. In a wrongful dismissal case, only legal and enforceable contract amendments will be examined in addition to the original contract conditions in existence at the time of contract formation.
In Kohler Canada Co. v. Porter, 2002 CanLII 49614 (Ont SCJ), the Ontario Superior Court stated:
“[c]ontinued employment, without anything more of value passing to an existing employee, is not consideration for a new promise disadvantageous to the employee.”
Kohler at para. 31.
Please read the following article to learn more:
Can Employer Force Employee to Sign a New Employment Contract to Avoid Constructive Dismissal Claim?
ESA Constructive Dismissal
Under Section 56 (1)(b) of the Employment Standards Act (ESA), an employer is deemed to have terminated an employee, for the purpose of the ESA, when he or she constructively dismisses the employee, and the employee resigns.
The employer is then liable to pay the employee ESA termination pay and ESA severance pay (if appliciable) under Part XV of ESA. Unpaid salary, vacation pay, and other benefits should be included in the severance package as well.
The ESA incorporates by reference the common law constructive dismissal test to determine whether someone has been constructively dismissed.
Temporary Layoff
An employee is on temporary layoff when an employer reduces or eliminates his or her job without terminating the employment.
The absence of a recall date by the employer when laying off an employee does not always imply that the lay-off is not temporary.
It should be noted, however, that a layoff, even if intended to be short, may result in constructive dismissal if it is not permitted under the employment contract.
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Common Law Temporary Layoff
There is no particular rule under common law for temporary layoff.
A temporary layoff, or any kind of job reduction or suspension, may be regarded as contractual repudiation under common law, and therefore trigger the common law constructive dismissal test.
Please see the preceding section "What Employer's Conduct Amounts to a Constructive Dismissal?" for information on instances concerning laying off an employee where there is no right to do so under the employment contract.
ESA Temporary Layoff
For the purposes of the ESA's termination provisions, a "week of layoff" is defined as a week in which the employee earned less than half of what they would normally earn in a week.
A layoff week does not include any week in which the employee did not work on one or more days because the employee was unable to work, was subject to disciplinary suspension, or was not supplied with work due to a strike or lockout at their place of employment or elsewhere.
Employers are not obliged under the ESA to give workers with written notice for a temporary layoff, nor are they required to offer a cause for the layoff. But an employer might be required to so under the collective agreement or employment contract.
Under Section 56 (1)(c) of Employment Standards Act (ESA), a "temporary layoff" is allowed, if there’s a “temporary layoff” provision in the employment contract.
Under Section 56 (2), for a non-unionized worker, a “temporary layoff” is:
(a) no longer than 13 weeks in any period of 20 consecutive weeks; or
(b) more than 13 weeks in any period of 20 consecutive weeks, but less than 35 weeks in any period of 52 consecutive weeks and, the employee continues to receive some benefits or payment from the employer.
An employee will be entitled to ESA termination pay and ESA severance pay if an employee is deemed to have been terminated under Section 56 (1)(b) of the ESA (constructive dismissal clause) or under Section 56 (1)(c) of the ESA if an employee is laid off for a time longer than the period of a temporary layoff.
Related Constructive Dismissal FAQs:
Work Schedules Change & Last Minute Shift Modifications
The Employment Standards Act (ESA) does not contain rules governing employers' work scheduling.
As a result, there are no laws requiring an employer to provide advance notice of shift schedules or of last-minute modifications to current schedules.
However, the schedule change could trigger the common law constructive dismissal test established in Potter, as it might be deemed to be a fundamental change to the employment contract if the change is substantial.
What is considered fundamental change is a fact driven question. Please see the preceding section for successful constructive dismissal cases concerning employer's unilateral change of oral promise and substantially altering an employee’s established job duties vs. unsuccessful cases including changing an employee’s hours to an earlier start time.
But the bottom-line is that an employer is NOT allowed to force an employee accept a change of schedule or availability, unless such acts are authorized by the employment contract.
Hours of Work, Eating Period, and the Three-Hour Rule Under the ESA
Please do note that all work schedules in Ontario are subject to the following requirement under the ESA:
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s. 17 to s. 21.1 regarding hours of work and eating periods, and
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s. 21.2 regarding the three-hour rule
Hours of Work and Eating Period
Generally, with some exceptions, for a work schedule, no one is allowed to work more than 13 hours a day, even with a mutual agreement between employer and employee authorizing it. No employer is allowed to require a worker to work more than five consecutive hours without an eating period of: 1) at least 30 minutes in duration, or 2) two eating period totaling at least 30 minutes in duration (if the employee agrees to it).
The Three-Hour Rule
The three-hour rule applies to an employee who routinely works more than three hours a day but works less than three hours on a given day despite being available to work more hours.
In this situation, the employer is required to pay the workers' wages for three hours that are equal to or more than the sum of:
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The amount earned for the time worked; and
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Wages equivalent to the employee's normal rate for the remaining time.
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6 - Legal Defence To A Claim of Constructive Dismissal
A party to an action (usually the employer defendant) has the right, under Section 31 of the Workplace Safety and Insurance Act (WSIA), to apply to the Workplace Safety and Insurance Appeals Tribunal (WSIAT) to determine whether the right of action has been statute barred by the WSIA.
Is A Constructive Dismissal Claim involving Work Related Stress Barred by WSIA?
If you quit due of harassment and try to file a constructive dismissal claim, it may or may not be statute barred. The "inextricably connected" test will be used. The issue is whether the sole claim for constructive dismissal is for workplace harassment, or whether there are additional grounds, such as breach of employment contract, repudiation, etc...
Guiding Principle In a Constructive Dismissal Case
The guiding principle in determining whether a constructive dismissal case is statute barred by the WSIA is whether or not the case involves a situation in which the worker's employment was effectively terminated by the harassing and bullying conduct of coworkers and management, causing his or her mental distress to such a degree that he or she was forced to take sick leave and, eventually, resign.
These circumstances if proven to be inextricably linked to a claim for mental stress under WSIA section 13(4), a worker's right to sue will be taken away.
However, it seems that the “inextricably linked” criterion will only exclude constructive dismissal actions based exclusively on WSIA 1) if the employee resigns, 2) not as a result of contractual repudiation by employer, 3) but as a result of job related mental stress, 4) while making no claim of Human Rights violation under the Human Rights Code.
The Morningstar Decision
The landmark case in this area is Decision No. 1227/19, 2019 ONWSIAT 2324, referred to as the “Morningstar Decision”. Appeal for a Reconsideration to have the decision overruled was denied in Decision No. 1227/19R, 2020 ONWSIAT 1151.
On April 2, 2018, Ms. Morningstar filed a Statement of Claim in the Ontario Superior Court of Justice, seeking damages for constructive dismissal, harassment, poisoned work environment under Occupational Health and Safety Act, as well as aggravated damages.
From May 2015, Ms. Morningstar worked in the housekeeping department of Hospitality Fallsview Holdings Inc. (HFH).
Ms. Morningstar resigned from HFH in February 2018, alleging constructive dismissal as a consequence of workplace harassment and bullying.
Ms. Morningstar alleged that over the course of 17 months, housekeeping workers were abusive, demeaning, and cruel to her, and that this behaviour was condoned and reinforced by HFH management.
HFH applied to the WSIAT to determine whether the plaintiff's right of action was taken away pursuant to Section 13, 26 and 31 of the WSIA.
The Workplace Safety and Insurance Appeals Tribunal (WSIAT) held in paragraph 30 of Decision No. 1227/19 that:
....[Ms. Morningstar]’s action against [HFH] is not for wrongful dismissal in the usual sense, but rather is for constructive dismissal, meaning her employment was effectively terminated by the harassing and bullying conduct of co-workers and management which caused her mental distress to such a degree that she was forced to take sick leave and ultimately to resign. I find that these facts, if proven, are inextricably linked to a claim for injury governed by the terms of section 13(4) of the WSIA....I find that the worker’s Statement of Claim is, in essence, a claim for injury resulting from alleged workplace harassment and bullying and thus is within the scope of section 13(4) ... to provide for entitlement for chronic mental stress arising out of, and in the course of, the [Ms. Morningstar]’s employment. Moreover, I find that the other remedies sought by the [Ms. Morningstar] are also claimed on the same facts, of harassment and bullying in the workplace. Accordingly, I find the worker’s right of action is taken away by the WSIA, pursuant to section 26 in this case.
Ms. Morningstar left her position in February, 2018. The WSIAT decision was issued in October, 2019. She appealed the decision for a reconsideration, which was denied in June 2020. The deadline to sue in WSIB for a workers' compensation claim had expired in or about August, 2018. Ms. Morningstar was statute barred of any recovery of damages for the workplace harassment and workplace discrimination that she had suffered!!
The “Inextricably Link” Test and The Exception
Section 26 of the WSIA bars a worker from pursuing a civil action arising out of a workplace injury where:
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foundational facts for the causes of action are inextricably linked to workplace harassment; and
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the workplace harassment results in a mental stress injury that is actionable under the WSIA.
According to Decision No. 616/21, which was issued on May 28, 2021, based on statutory interpretation and the historical context for workers' compensation legislation, the WSIA does not bar claims that DO NOT seek damages in respect of a personal injury sustained as a result of a workplace accident, including constructive dismissal claims seeking damages for reasonable notice.
Please click on the following articles to learn more about the interplay of WSIA, Constructive Dismissal and Wrongful Dismissal involving claims of mental stress and stress related disabilities:
Am I Barred From Claiming Constructive Dismissal or Wrongful Dismissal if I Quit Due to Stress?
Interplay between Long Term Disability, Wrongful Dismissal, Disability Discrimination
The Persistent Myth of the "2-Year" Rule in Disability Cases
7 - What Remedies Are Available In a Constructive Dismissal Cases?
The remedy for constructive dismissal is an award of damages equal to the earnings (salary, commissions, bonuses, and other monetary allowances) and other contractual entitlements (benefits) that the employee would have received during the appropriate notice period, subject to certain deductions such as mitigation earnings.
Aggravated damages may also be awarded in cases where the employer’s bad faith conduct compelled the employee to resign. Punitive damages may also be available if the employer's conduct constitutes a marked departure from ordinary standards of decency, and that compensatory damages are insufficient to express society’s repugnance at the conduct and to punish and deter.
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Duty to Mitigate in a Constructive Dismissal Case
Duty to Mitigate is not applicable to an employee of a fixed term employment contract. The employer is responsible to pay for the remaining balance of the fixed term contract, if such an employee is terminated before the fixed term expires.
An employee who has been constructive dismissed is required to make reasonable and diligent effort to mitigate, seeking re-employment. In constructive dismissal actions, damages may be reduced if such efforts are not proven.
Reasonable re-employment options are not limited to job-searching efforts. The test is whether reasonable, consistent and active ongoing steps have been taken to move toward a return to the workforce on a reasonable basis.
For instance, returning to school or starting a new business have been held to be reasonable mitigation. For this reason, as an employee contemplating a wrongful dismissal action, it is crucial to keep a comprehensive record of job search and other reasonable efforts to mitigate damage.
What Earnings Count in Considering the Duty to Mitigate in Wrongful Termination and Constructive Dismissal Cases?
In Brake v. PJ-M2R Restaurant Inc., 2017 ONCA 402 (“Brake”), in her concurring reason at the Court of Appeal, Justice Feldman explained why the employee’s earnings as a cashier at Home Depot are inoperative to reduce her wrongful dismissal damages at paragraph 158:
It follows, in my view, that where a wrongfully dismissed employee is effectively forced to accept a much inferior position because no comparable position is available, the amount she earns in that position is not mitigation of damages and need not be deducted from the amount the employer must pay.
That view has begun to gain traction and is becoming the norm based on recent legal jurisprudence.
MacKenzie v. 1785863 Ontario Ltd., 2018 ONSC 3442
The plaintiff in MacKenzie worked as a general manager with the defendant employer for approximately five years, having been recruited from previous stable employment. At the time of his dismissal, Mr. MacKenzie was 65 years old and earned $65,000 per year (or $5,416.66 per month).
Where Mr. MacKenzie lived (Dryden), there was a lack of comparable employment. As such, he worked first for his wife’s consultancy business (earning $2,000 per month), and later accepted work with a regional tourism organization earning $1,500 per month.
The Court found Mr. MacKenzie had been wrongfully dismissed and awarded damages equal to 9 months’ pay in lieu of reasonable notice ($48,749.94) plus exemplary damages. Justice Pierce then declined to deduct any post-dismissal earnings from the damages award, at para. 14, finding that:
Mr. MacKenzie was obliged to take positions that were inferior in responsibility and salary after his termination. Accordingly, I find that the income earned should not be deducted from the notice period awarded.
McLean v Dynacast Ltd., 2019 ONSC 7146
The plaintiff in McLean was employed with the defendant employer for 34 years. At the time of his constructive dismissal from employment, he was 58 years old, working as a sales and service technician, earning $60,000 per year.
Following his dismissal, Mr. McLean work for a former supervisor for 3 weeks at a plant in Mexico, did periodical work wiring electrical panels for another business (on an as-needed basis) and subsequently started a roofing business from which, as of the date of trial, had created no income.
The Court awarded Mr. McLean damages in lieu of a 28-month reasonable notice period and declined to deduct the majority of post-dismissal earnings (including those from the plaintiff’s roofing business).
The Court found at para. 87 that “as it would not be a failure to mitigate if a dismissed employee turned down an inferior position, so it follows that if the employee accepts an inferior position no earnings from that job should be considered as mitigation earnings for deduction from an award for wrongful dismissal.”
If you think you have been constructively dismissed, or if you are an employer being served with a statement of claim for constructive dismissal, you are highly recommended to seek legal advice. Don't wait!! Time is of the essence. No-Win-No-Fee for constructive dismissal cases. Call us now at 647-849-6582 or Contact Us Now for inquiries or to book an appointment.
High Damage for Wrongful Dismissal & Constructive Dismissal
In a constructive dismissal lawsuit, it is the Employer's bad faith conduct that compels an employee to resign and other conducts afterwards that decides whether or not aggravated and punitive damages are warranted. When the conduct of the employer is abusive, flagrant, egregious, high-handed, and humiliating, high damage is likely.
Extraordinary / Aggravated / Moral Damage In Constructive Dismissal Cases
Moral damages are also known as aggravated or Wallace damages. It's a common misconception that the heinous nature of workplace harassment, sexual harassment, and workplace discrimination by itself should justify these aggravated damages.
The Court has repeatedly stated that moral damages have nothing to do with the unlawful acts of harassment or discrimination themselves, because the damages awarded for these tortious conducts have already taken into account the grotesque nature of the wrongful conducts.
The Court, quite consistently, have found that these moral damages are only to be awarded in dismissal claims against an employer who engaged in conducts of contractual repudiation and other conducts after the employee was forced to resign that were "unfair" or "in bad faith" and caused the employee mental distress that exceeded the "normal distress and hurt feelings that result from a dismissal."
Unlike punitive damages, which are intended to punish the employer, moral damages are compensatory in nature.
Moral damages are available when the injury or loss to the employee is foreseeable as a result of the employer’s conduct.
Punitive Damage In Wrongful Dismissal and Constructive Dismissal Cases
The Supreme Court has stated in Whiten v Pilot Insurance Company, 2002 SCC 18, punitive damages are the exception rather than the rule, and are only imposed if there has been high-handed, malicious, arbitrary, or highly reprehensible misconduct that departs to a marked degree from ordinary standards of decent behaviour.
Punitive damages are typically awarded only when the wrongdoing would otherwise go unpunished or when alternative punishments are insufficient or are likely to be insufficient to achieve the goals of retribution, deterrence, and denunciation.
Punitive damages are NOT to compensate the plaintiff, but to give a defendant his or her just desert (retribution), to deter the defendant and others from repeating the same wrongdoing in the future (deterrence), and to express the community's collective disapproval (denunciation) of what has occurred.
In recent years, aggravated damages and punitive damages are frequently awarded. If you are an employer, in order to protect yourself from High Damage award in Constructive Dismissal cases, DO investigate employee complaints of harassment and discrimination, MOST DEFINITELY make necessary accommodations.
More importantly, if a constructive Dismissal lawsuit has been filed against you as an employer, DON'T delay the process; do everything you can to expedite the process and, if possible, try to negotiate a fair settlement with the employee.
Please note that duty to mitigate and high damages applies to both constructive dismissal and wrongful dismissal cases. Click here to learn more about wrongful dismissal.
We hope you now have a better understanding of what is Constructive Dismissal, where to sue for Constructive Dismissal & what's the Time Limit, Legal Test for Constructive Dismissal, Legal Defence available to a claim of Constructive Dismissal, and what remedies are available in a Constructive Dismissal Case.
When you require assistance with a constructive dismissal case, HTW Law – Employment Lawyer is only a phone call away. There's no need to search around for a constructive dismissal lawyer who is ready, willing and able to assist you. When you call, we will be there to help you. We look forward to serving you soon.
FREE constructive dismissal consultation with an experienced constructive dismissal lawyer for qualified constructive dismissal cases!! We handle sensitive constructive dismissal clients’ information with care. Call us now at 647-849-6582 or Contact Us Now if you have constructive dismissal questions or want to book an appointment for a constructive dismissal lawyer consultation.
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