Employment / Labour Law
Constructive Dismissal

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 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.


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 an employer (1) unilaterally makes a change to an express or implied term of the employment contract that a reasonable person in the shoes of the employee would view as substantially altering an essential term of the contract, or (2) otherwise acts in a manner that would lead a reasonable person to conclude that the employer no longer intends to be bound by the contract, the employer commits a repudiation of the contract, which entitles the employee to consider himself or herself constructively dismissed and to claim damages in lieu of reasonable notice.

Under the first branch of the test, 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.

Under the second branch of the test, no breach of a specific employment term need occur; 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.

Each constructive dismissal case is unique. The Court has found a case of constructive dismissal under the following circumstances:

  1. Temporarily laying off an employee where there is no right to do so in the employment contract.

  2. Substantially altering an employee’s established job duties.

  3. Substantially decreasing an employee’s salary, even if on a temporary basis.


However, please notes that the Court has NOT found a case of constructive dismissal under the following circumstances:

  1. Disagreeing with an employer’s proposed formula for calculating a bonus.

  2. An unhappy work environment if, objectively speaking, the conduct complained of does not rise to the level of harassment.

  3. Suspending an employee pending an investigation into substantial misconduct.

  4. An employee’s decision to resign for reasons unrelated to a fundamental change to the employment contract.

  5. Changing an employee’s hours to an earlier start time and disciplining an employee for insubordination.


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 seen to have acquiesced to the change, and the claim for constructive dismissal is thus extinguished.


When you suspect that you might have a claim of constructive dismissal, don’t wait as time is of the essence! HTW Law can help. Call us now at 647-849-6582 or send us a message if you have some legal questions / inquiries or want to schedule an appointment with HTW Law.


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